Topological Evolution Analysis of the Lightning Network of Payment Channels
Abstract
Payment channel networks (PCN) offer a fast, secure, and distributed alternative for issuing payments while avoiding slow consensus mechanisms of blockchains. In this new technology, the network topology established between payment channels directly influences the performance, cost, and transaction success of participants. This paper analyzes the topology of the Lightning Network, current leading payment channel network, evaluating and discussing the network evolution. The paper reconstructs the network graph from real data using a set of gossip messages from channel and payment announcements collected between January 2020 and August 2021. The results show a strong trend of centralization of funds and connectivity, where 0.38% of nodes concentrate 50\% of the network capacity, thus exposing a vulnerability to targeted attacks. As with the Bitcoin cryptocurrency, the centralization found in practice directly conflicts with the initial proposal of a peer-to-peer, i.e. decentralized, network. Moreover, the low transitivity of the network compromises the use of channel rebalancing techniques, which contribute to the stability of the system. This identifies the need for new attachment policies that prioritize greater decentralization and robustness of the network, in addition to prioritizing the creation of cycles for effective channel rebalancing.
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