Routing

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Routing

Aimed for forwading 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 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)

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Methods to create a balanced channel with a trusted peer

Last modified 2mo ago

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Contents

Connect clusters and big payment processors

Provide liquidity to merchants

Payment hub for small nodes

Sell incoming liquidity

Examples