Routing

Aimed for forwarding payments successfully while generating profit.

Capital requirement

• high

Channels and peers

• numerous (~10+) big channels to well connected nodes

• connect to the network edge to get usage

• aim to connect node clusters (isolated groups)

Liquidity

• balanced between local and remote overall

• individual channels should be able to forward payments in both directions

Uptime

• aim to be perfect

• offline routing nodes with many public channels are causing networkwide payment failures

• greatly affects the reputation of the routing node

Management

• autorebalancing (cronjobs are useful)

• create inbound and outbound liquidity as required

• balance between multiple nodes

• close inactive channels

• open to directions where liquidity is required

• use Lightning Pool, Amboss Magma or liquidity ads bids and asks

• batch channel opens to save on miner fees

• fund channels from external wallets

• close to external addresses to reduce the hot wallet risk

• explore the many tools available

Strategies

Connect clusters and big payment processors

• bidirectional traffic

• fees are low

• highly competitive (lots of liquidity is in private channels)

Provide liquidity to merchants

• high incoming liquidity required

• fees can be set to moderate - high

• selling channels via Lightning Pool often falls into this category

Payment hub for small nodes

• fees can be left to be low

• traffic is mostly outgoing

• should encourage the usage of private channels

• offline public channels lead to payment failures and affecting the routing node's reputation)

Sell incoming liquidity

• LOOP

• Bitfinex

• set high fees due to unidirectional traffic and the quick drain of inbound capacity

• not all LN supporting exchanges are connectable and need individual evaluation about the direction of traffic

Examples

• Self hosted on dedicated hardware

• Custom system on enterprise hardware focused on uptime and redundancy

• Hosted on a VPS (higher risk)