Path Queries: Addressing Payment Reliability and Routing limitations

In the ongoing discussion about optimizing payment routes within a network without necessitating prior knowledge of its liquidity state, a significant emphasis is placed on reducing communication overhead and avoiding the constant probing of the network's dynamic liquidity. The proposal under consideration advocates for a mechanism that enables nodes to discover reliable paths for payments through a single round-trip of path_query and path_reply, contrasting sharply with the three round-trips required by HTLC setups. This approach not only aims to mitigate the issues surrounding payment infeasibility, as highlighted in various discussions, but also seeks to streamline the process of finding feasible paths rather than creating them from scratch.

The discourse further explores the potential implications of this proposal on routing node behavior, particularly concerning the adjustment of channel fees based on perceived liquidity desirability. It suggests that by allowing routing nodes to control the dissemination of their liquidity information selectively, the system could inherently protect the privacy of channel balances while offering a strategic advantage. This would theoretically prevent straightforward inferences about a node’s liquidity state based solely on the paths it offers, thereby enhancing privacy and operational flexibility similar to existing trampoline routing mechanisms, albeit with noted differences in complexity and the necessity for initial path feasibility.

Moreover, the conversation delves into the concept of dynamic policy adjustments as a means to balance channel liquidity effectively. It draws parallels with rate cards, emphasizing the added flexibility for routing nodes to modify fees in response to their current liquidity situations without requiring payment senders to speculate on rates. This aspect underlines an adaptive approach to managing network dynamics, countering the notion that increased knowledge among routing nodes might lead to expedited channel depletion.

Concerns are raised regarding the scalability of such proposals, especially in light of network diameter growth and the potential shift towards a hub-and-spoke model which, while increasing payment reliability, deviates from the desired decentralized network structure. The limitations imposed by onchain constraints are acknowledged; however, the argument posits that these constraints do not necessarily cap the network's growth or its capacity to accommodate an indefinite number of nodes and channels. It suggests looking beyond traditional block size limitations to envision payment channels established across various settlement layers or realms, thereby proposing a more expansive view of network scalability and functional longevity.

The discussion encapsulates a broad spectrum of technical considerations, from improving payment efficiency and privacy to addressing scalability and network dynamics, indicating a rich area of exploration for future network enhancements and protocol developments.