Its because they keep one channel open for you no matter what you do. Before if you didn't have enough inbound liquidity you would have to open a whole new channel and you would have 2 channels so as time goes you might have 10 channels open..
The way they do it now is lets say you have a 60k channel open with 40k sats in it and you receive 40k sats bow tbey just expand your same channel and charge you a small fee.
Yeah well... That's 1 on-chain transaction per lightning transacting. What do we win here?
Simplicity
I could just make an on-chain transacting then. Why still use the lightning network for that?
On chain transactions aren't fast like lightning. Even at 1sat on chain you will not receive the btc as fast as lightning.
Speed, ok. But this concept also impedes the biggest reason that lightning is actually built for: scaling. If I need one on-chain transaction per lightning transaction, then the whole thing can't do more transactions than layer 1 is able to do.
https://acinq.co/blog/phoenix-splicing-update not what is happening. Splicing is the technology employed here and it improves scaling.
There is a cost to opening channels: you need inbound and outbound sats per channel, but with splicing, you can simply add or remove liquidity from a channel without closing the channel or opening a new one.
This means capital is allocated more efficiently. If you have 5 channels to the same peer, that's an inefficiency.
It's still important to predict inbound usage in order to set aside the right amount of money for the user to receive sats and only when that prediction was wrong will you incur an onchain transaction.
Too big, you are locking up too much capital with your customers and being ineffective. Too little, you are not effectively scaling off-chain.
Phoenix used to charge for opening a channel, they'd charge the on chain transactions fee, and a fee for inbound liquidity.
Now they changed their model so that opening a channel is at cost and instead they apply their fees at the transaction level which is why it seems more expensive.
Here's a blog about this change:
Ok, maybe I didn't understand it right. Will research it a bit more.
