Interesting. Who is working on fixing this? Specifically you are referring to fees?
Discussion
LSPs address this, and again we end up with some centralizing forces. In the end we still end up with most being custodial.
I am certain > 95% of payments i make goto custodial accounts
Buraq came up with a protocol called Arc to address this issues. There isn't a working demo yet but I think there are people working on it.
If you think LN liquidity is hard. You’re going to love Arc.
Are you saying its worse on Arc? On Arc it's the ASP responsibility, it's easier for the end user and to onbord people.
Very much worse. You end up concentrating HUGE amounts of liquidity at the ASP level. (This is my basic understanding and I’m happy to be corrected.)
Yes but it's ASP liquidity, a new user doesn't need to have funds locked to receive a payment. And it doesn't need to run a node.
How much liquidity does an ASP need?
I think it's all the liquidity required to perform it's clients transactions, so I say it will depend on the ASP size or vice-versa, but I am assuming the norm will be large amounts, basically the same as big LN nodes now but instead of users putting up front it will be the ASP.
Keep digging. How long does the large amount of liquidity have to stay locked up? Iirc, it’s cumulative and massive compared to LN nodes. Even big ones.
It's 4 weeks I think, the user should redeem the txs in this time frame, I think it's because of that, so that liquidity isn't cumulative. But I'm not an expert neither in LN. We can only tell when there is a working wallet. But imo LN just as a user is a pain, but it's still the best we've got.
I believe arc requires a soft fork. But yes buraq says lightning leads to risk of centralisation
We have to tradeoff something in layer 2, either decentralization or thrust. I'm not worried about centralization in LN it's a permissionless protocol. I think Arc might be more centralized but a much better experience.