mister_monster on Nostr: LN isn't centralized, but it has some game theoretical incentives that act as a ...
LN isn't centralized, but it has some game theoretical incentives that act as a centralizing force on the network.
The big one, so if I were able to just spin up a node and start going, like with bitcoin, then that's not a centralizing force. But since I have to *open a payment channel* with someone, now there's an incentive for everyone to have a channel open with the shortest number of hops, and that means that people will tend to open their channels with 1) the intermediate with the most channels open with others, and 2) the intermediate with the most liquidity. And so, you have an incentive structure that, over time, tends towards centralization.
Another thing is that, since payment channels can be closed by any counterparty for inaction, a node needs as close to 100% uptime as possible. This is an incentive that leads to people using node-as-a-service operators instead of running them themselves.
Empirically, you see both of these phenomena right now, IRL with lightning.
The big one, so if I were able to just spin up a node and start going, like with bitcoin, then that's not a centralizing force. But since I have to *open a payment channel* with someone, now there's an incentive for everyone to have a channel open with the shortest number of hops, and that means that people will tend to open their channels with 1) the intermediate with the most channels open with others, and 2) the intermediate with the most liquidity. And so, you have an incentive structure that, over time, tends towards centralization.
Another thing is that, since payment channels can be closed by any counterparty for inaction, a node needs as close to 100% uptime as possible. This is an incentive that leads to people using node-as-a-service operators instead of running them themselves.
Empirically, you see both of these phenomena right now, IRL with lightning.