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Replying to Avatar Zach⚡️

“Net positive to the network” isn’t the way that I think about it. People need to act based on their own incentive structures. This isn’t going to work if we need to rely on altruism to effectively route payments and balance channels.

If you don’t want your channel to be part of my circular rebalance, perfect. Don’t let people route through your channel then. Make it a private channel which doesn’t support routing and isn’t part of my graph. There’s no other way to prevent circular rebalancing behavior from occurring because it’s fundamentally no different than routing a normal payment.

If you do want your channel to be part of my circular rebalance, that’s also perfect. Set your fee rate, and I’ll decide whether it’s worth it for me to pay you to preform that service for me. That’s a free market for routing and fee collection; and that’s a model which can win.

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buffalo 2y ago

I don't expect anyone to act out of goodness or whatever.

I just now discovered, the incentives for this are applied by charging more routing fees if a transaction unbalances a channel and less if a transaction balances the channel.

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