Mitigating Channel Depletion in the Lightning Network: A Survey of Potential Solutions

The notion is not to eliminate on-chain actions but to minimize them to levels conducive for scaling. The Forwardable Peerswaps proposal, as highlighted by @ZmnSCPxj, presents a method to scale a single on-chain action across multiple channels by rebalancing them simultaneously. This approach does not compromise privacy since it maintains the confidentiality of in-Lightning payments. Similarly, sidepools emerge as an innovative solution, functioning as unpublished multiparty channels that do not alter existing routing protocols or compromise privacy. These strategies underscore the importance of reducing, rather than eliminating, on-chain actions for effective scaling and preserving privacy.

The management of liquidity and control of payment flows within the LN has seen various operational strategies, particularly through the strategic use of htlc_maximum_msat. Node operators employ this value as a dynamic indicator of channel liquidity, with some adopting sophisticated models like Markov processes for its adjustment. Eclair's implementation stands out by setting htlc_maximum_msat to zero under near-depletion conditions, showcasing a nuanced approach to managing liquidity. Despite the potential of htlc_maximum_msat as a traffic control mechanism, discrepancies in its application across different node software highlight the challenges in standardizing operational strategies within the decentralized network. The absence of uniform semantics for htlc_maximum_msat underscores the need for a unified understanding to enhance network efficiency and interoperability.

An emerging solution to enhance payment success rates involves a query message system for path discovery. This approach allows nodes to share feasible outbound channel sets without revealing specific balances, potentially increasing transaction success rates while offering enhanced control over routing policies. This methodology suggests a departure from conventional practices, emphasizing privacy and efficiency in liquidity management. The discussion also touches upon the broader issues of channel depletion and the exploration of both protocol-level changes and voluntary node behavior adjustments to mitigate these challenges. Suggestions range from extending gossip protocols for liquidity information sharing to adopting dynamic pricing mechanisms and reorganizing the LN into hierarchical topologies. These proposals reflect the complexity of addressing liquidity challenges in the LN, highlighting trade-offs related to privacy, scalability, and the decentralized nature of the network. Despite these efforts, it's acknowledged that these strategies alone cannot fully resolve payment infeasibility without additional on-chain transactions, emphasizing the ongoing search for balanced and effective solutions.