Original Title: "LIGHTNING IS DOOMED"

Author: Shinobi

Translation: Luccy, BlockBeats

Editor's Note:

In an email on October 16, 2023, it was mentioned that the Lightning Network channels face the risk of fund loss, mainly due to issues with the transaction pool. Shinobi, a self-taught educator in the Bitcoin field, analyzed some of the challenges and issues in the Lightning Network, particularly those related to high fees, transaction confirmations, and double-spending. Through a review of the original white paper and a detailed analysis of the network architecture and potential problems, he proposed some views on the future development of the Lightning Network and clearly stated that "the Lightning Network is doomed to fail."

The Lightning Network is doomed to fail. The exorbitant fees from Ordinals have killed any hope of scaling Bitcoin through non-custodial means, leaving people with little opportunity to open channels affordably or execute pending payments on-chain when necessary. It's all over, and everyone can pack their bags and leave. Now is the time to shop around and decide whether Coinbase or Cashapp is the better platform for our Bitcoin needs, as we can no longer transact directly on-chain in this high fee environment.

The past was very pleasant. We will always have pixelated private parts pictures that appeared on the Lightning Art Station, as well as the meme of the lightning torch. Even when everyone was afraid to send it to countries with only bad people, we will continue to make lightning payments from one hosted account to another. We are about to enter the era of closed gardens!

Exclude the smoke from gas lamps

The original Lightning Network whitepaper explicitly stated in the conclusion that in order for 7 billion people worldwide to be able to open two channels each year, Bitcoin would need a block size of 133 MB.

The 9th section of the white paper, titled "Risk," provides a detailed explanation of all the major issues that people believe will cause the Lightning Network to "inevitably fail" due to high fees. The first section of the paper discusses the time lock window, where "improper time locks" have recently garnered significant attention due to the dynamic between fees and confirmation times. When making a payment over the network, you can define a successful path based on the preimage hash lock and define a refund path based on the refund time lock window. If fees increase, the refund time lock window needs to be longer to ensure that the preimage spending (transaction success) does not fail confirmation before the refund transaction becomes spendable.

That is to say, if you must confirm the successful payment on the chain, the time lock on the refund path must be long enough so that you can confirm the successful payment path before the other party requests funds through the refund path. As the fee rate increases, the time lock window needs to be longer because the higher the fee rate, the lower the transaction fee decided in advance for closing the pre-signed channel, which may result in a confirmation speed slower than expected when you sign them in advance.

Many people are very nervous about this dynamic, as if it is some kind of new cognition, which marks the doom of the Lightning Network. In fact, in the initial white paper, a risk in the first version of the Lightning Protocol was explicitly described. It even explicitly describes the trade-off of opportunity costs from an economic perspective: "There is a trade-off between longer time locks and the time value of money."

The next section is called "Forced Expiration Spam," which describes the general concept of flood and loot attacks. If the fee is too high, refund transactions may successfully execute a double-spending path transaction that requires something to be done on the chain. In order to take advantage of this, the adversary will open a large number of channels and close them all at once on the chain. If you have a large number of channels in the payment process and you close them all at once and push the fee to a high enough level, each channel's counterpart must confirm successful payment on the chain. If the fee is pushed high enough to make the time lock transaction effective before the successful transaction with preimage is confirmed, they may find themselves in a double-spending race.

If you open enough channels and push the fees to a high enough level, you can profit from it. This is actually described as a building concern in the white paper. Such attacks were described in various versions of the white paper between 2015 and 2016, but it was not formally modeled and introduced into the news cycle of this field until 2020.

The whitepaper describes the situation of data loss, which is losing the pre-signed closing transaction and the punishment key of the old state, which allows malicious channel counterparties to steal your funds when they realize this. It mentions the situation where punishment transactions cannot be broadcasted and the potential for watchtowers to be paid as third parties to observe the blockchain and submit these transactions on your behalf. The whitepaper explicitly describes the review of channel punishment transactions by miners as a risk and suggests anonymization (and implied decentralization) of miners as a mitigation for this risk.

But these are all new perspectives. The Lightning Network is destined to fail because no one foresaw the emergence of these issues.

This is your stupid blockchain

Okay, I think we can only admit that we have lost our historical context, our rationality, and our logic. We live in a reality where we have to pretend that the warning of history does not exist, and no one points out the obvious problems that the future is destined to face. All of this is a completely unknown territory, and no one has ever considered how things will develop.

What is the title of section 9.6? Unable to perform necessary soft fork.

The original white paper clearly stated the risk of the inability to coordinate soft forks for the success of the Lightning Network. Are you surprised? Have you never read it before? Personally, I have a sense of déjà vu.

I remember many years ago, a large group of Bitcoin supporters screamed that the blockchain itself was reaching its scalability limit, and unless we fundamentally change the nature of the decentralized trade-off of the system, it will fail. If people cannot directly submit all transactions and get confirmation in an economical way, the blockchain is fundamentally useless.

When people began to debate the economic benefits of blockchain at scale, the entire foundation of the Bitcoin ecosystem was thoroughly shaken, which is actually the whole reason for the block size war. What is at the heart of this chaos? People's expectations of the role that blockchain plays in the constantly evolving ecosystem of Bitcoin. Everyone will buy coffee on the chain at an economically feasible rate, otherwise Bitcoin will be a complete failure.

People who hold this mentality completely misjudge the whole situation. They try to fit a square peg into a round hole. This is exactly the same as the situation with the Lightning Network.

方形楔子，圆洞

translates to

Square Wedge, Round Hole

People's judgment of blockchain is actually a serious misjudgment. It is only a place to open and close processing channels, not a place to buy coffee. However, it is almost impossible for people to misjudge the Lightning Network, which is definitely a place to place coffee payments. You see, when you say this in the right context, it sounds ridiculous? There are problems with the Lightning Network in enforcing payments on the chain. If the value of the payment is less than the cost of submitting the transaction to the chain, this is a problem. Trying to enforce it on the chain economically doesn't make sense, and this is a well-known problem. In essence, this is almost the same problem as low-value payments occurring directly on the chain, except that in optimistic situations, things will proceed normally because people cooperate off the chain. But when they don't cooperate, problems arise.

This issue is so well-known that there were many debates about solving it years ago, involving different trade-offs and sub-payment schemes. If the HTLC is too small to be enforced trustlessly on-chain, you can pay the flow one sat (or larger sats blocks) at a time in a trusted way, and if someone at some hop decides to steal one sat from you, the flow stops and you choose another route. This idea means that while it is a trusted payment mechanism, only a few sats can be lost in the channel of on-chain payments, and if someone steals from you during payment, you simply stop routing through those nodes. This quote is from 2019, but this idea was discussed long before that.

There is an issue with the Lightning Network! And for this issue, most readers may have never heard of a solution. It seems that all of these problems that people think the sky is falling have been fully understood since the beginning of the Lightning Network. This raises a question: are we wrong again?

It is not necessarily wrong to say that the Lightning Network is doomed to fail, but it is wrong to assume that it will be used in the long term as we initially thought, just like the blockchain itself. We have seen the Lightning Network dominated by custodial applications, and people are working to deploy something specifically designed to sit on top of the Lightning Network. At first glance, electronic cash minting, Uncle Jim setups like LNBits, and people having custodial accounts on someone's Lightning node. We even have proposals like Ark being built in the concept validation phase on Liquid, which can perform atomic swaps with Lightning payments.

If the Lightning Network does not become the killer protocol for consumers to interact directly with and make online payments, what if, like the blockchain itself, it ultimately only becomes a part of the settlement layer that other things are built upon?

Would that be the end of the world? Would that be the failure of the Lightning Network? I don't think so. The scalability limitations of the Lightning Network have been evident since its development began. The whitepaper actually mentions the lack of support for the necessary soft fork in the future as a limitation to the potential scalability of Lightning. This is by no means the end of the world, nor is it the failure of the Lightning Network.

The Lightning Network is proving that it can serve as an interactive layer between different custodians, and it operates very smoothly and efficiently in this regard. There is absolutely no reason to believe that the Lightning Network cannot operate as a similar connecting layer for other second layers with superior trust models than explicit custody. If channels are not something that individuals can benefit from in terms of daily spending activity costs, it does not mean that they are not cost-effective for LSPs running new protocols outside of Lightning and connecting with each other, allowing their users to interact with each other. Arks, Statechains, and any new ideas developed in the coming years.

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