LN routing and caveats

The primary concern with the Lightning Network (LN) lies in its inability to facilitate direct coin transfers among all participants, prompting a preference for sidechains among users. Sidechains allow for a one-time transfer of coins into a secondary layer, enabling unrestricted transactions among network participants without repeated fees. This feature starkly contrasts with the LN's operational framework, where each transaction incurs both LN and on-chain fees, making it less economically attractive for substantial coin movements.

Financial implications also play a significant role in the reluctance to adopt the LN over sidechains. For instance, the costs associated with transferring 1 BTC through the LN, which includes a fee of 100,000 satoshis (0.1%), significantly outweigh those incurred through direct blockchain transactions. These can be as low as a few hundred satoshis, without the constraints imposed by channel liquidity and the necessity of having an open channel with the recipient.

The challenges facing the LN are primarily technical, encompassing issues such as fees, liquidity, and the restricted ability to send coins freely across the network. The resolution of these problems could potentially elevate the LN's utility. However, unless these barriers are surmounted, sidechains present a more viable solution for users seeking flexibility and lower costs in their transactions, due to their ability to bypass the limitations inherent to the LN's design.