Rene Pickhardt just lately kicked off a thread discussing the variations between two social gathering and multiparty (greater than two individuals) cost channels because it pertains to his analysis work round cost reliability on the Lightning Community. He voices a rising skepticism of the viability of that route for improvement.
The excessive degree concept of why channel factories enhance the reliability of funds comes right down to liquidity allocation. In a community of solely two social gathering channels, customers must make zero sum decisions on the place to allocate their liquidity. This has a systemic impact on the general success fee of funds throughout the community, if folks put their liquidity someplace it isn’t wanted to course of funds as an alternative of the place it’s, funds will fail because the liquidity in locations folks want is used up (till it’s rebalanced). This dynamic is just one of many design constraints of the Lightning Community recognized from the very starting, and why analysis like Rene’s is extremely vital for making the protocol/community work in the long term.
In a mannequin of multiparty channels, customers can allocate liquidity into giant teams and easily “sub-allocate” it off-chain wherever it is sensible to within the second. Because of this even when a node operator has made a poor choice through which individual to allocate liquidity to, so long as that individual is in the identical multiparty channel with folks that may be a superb peer, they will reallocate that poorly positioned liquidity from one to the opposite off-chain with out incurring on-chain prices.
This works as a result of the idea of a multiparty channel is actually simply everybody within the group stacking standard two social gathering channels on prime of the multiparty one. By updating the multiparty channel on the root, the 2 social gathering channels on prime might be modified, opened, closed, and so forth. whereas staying off-chain. The issue Rene is elevating is the price of going on-chain when folks don’t cooperate.
Your complete logic of Lightning relies round the concept in case your single channel counterparty stops cooperating or responding, you may merely submit transactions on chain to implement management over your funds. When you will have a multiparty channel, every “degree” within the stack of channels provides extra transactions that must be submitted to the blockchain with a purpose to implement the present state, that means that in a excessive price atmosphere multiparty channels will probably be costlier than two social gathering channels to implement on-chain.
These are core trade-offs to contemplate when these methods in contrast to one another, however I feel focusing solely on the on-chain footprint ignores the extra vital level relating to off-chain methods: they’re all about incentivizing individuals to not go on-chain.
Correctly structuring a multiparty channel, i.e. the way you arrange the channels stacked on prime, can let you pack teams of individuals into subsections which have a status for prime reliability, or who belief one another. This could enable folks in these subgroups to nonetheless reorganize liquidity inside that subgroup even when folks exterior of it should not responsive quickly, or go offline as a result of technical points. The on-chain price of imposing issues, whereas vital, is type of tangential to the core design objective of an off-chain system: giving folks a purpose to remain off-chain and cooperate, and eradicating causes for folks to not cooperate and power issues onc-chain.
It’s vital to not lose sight of that core design side of those methods when contemplating what their future will appear to be.