LN routing and caveats

When an individual, referred to as Alice, wishes to transact over the LN without an existing direct channel to the recipient, Bob, she must first establish a channel with a node that acts as a gateway to the broader network. This node, often a Trampoline Node like ACINQ, possesses a detailed map of the network's nodes and channels, enabling it to assist in routing decisions. Utilizing algorithms such as Dijkstra's for pathfinding, the Trampoline Node identifies the most efficient route through the network's mesh of channels.

Upon funding this entry channel, Alice embeds herself within the LN, setting the stage for her transaction to Bob. The process involves Alice creating a payment in Electrum, directed towards Bob's LN invoice, which results in a contractual commitment of funds—say 1 BTC—to the ACINQ node contingent on the completion of the transaction. ACINQ then calculates the optimal path, engaging with intermediary nodes along the route through sequential contracts that promise to forward the transaction towards Bob.

This scenario raises several critical inquiries regarding the operational dynamics of LN transactions. For instance, there is concern about whether nodes like ACINQ could refuse channel openings with Alice due to Anti-Money Laundering (AML) considerations or other reasons. Additionally, questions arise about who—whether the sender or an intermediary node—has the authority to decide the routing path, especially when multiple paths may be viable. The concept of "capacity" within the LN is also scrutinized. This term describes the total sum of all funds available across a node's open channels, such as ACINQ’s substantial capacity, which influences its ability to route large transactions.

There is further examination of how this capacity impacts practical aspects of LN usage, including the feasibility of routing significant sums, the connectivity requirements of nodes to support such transactions, and the strategies for sending large amounts—whether as a single transaction or split into smaller segments. The sender expresses particular concern over the use of LN for business-to-business (B2B) transactions involving large values, potentially exceeding 1000 BTC. This includes deliberations on the necessary capacity for entry channels, anticipated fees, transaction times, and the overarching technical limitations and requirements for leveraging LN effectively in commercial settings. Such considerations underscore the complexity and challenges inherent in scaling the LN for larger, more frequent business transactions.