bitcoin-dev
Combined summary - Scaling Lightning With Simple Covenants
The recent discussions among programmers have centered on enhancing the Lightning Network's operation and scalability.
John has analyzed trade-offs between trust/safety and capital efficiency, suggesting a prepayment system to balance channel lifetime risks and fund adjustments. He has calculated the scalability of timeout-tree leaves on-chain using a Python program and contributed to a paper on passive rollovers, detailing the functioning of commitment transactions in hierarchical channels.
Antoine has highlighted scaling issues for off-chain constructions, like liquidity imbalances, proposing improvements such as on-chain splicing. He also expressed concerns about coordinating a large number of users and mentioned cryptographic tools for better scalability.
John agreed with Antoine on addressing the needs of casual users, proposing hierarchical channels and timeout-trees for their convenience. He acknowledged practical challenges in coordination for required signatures and emphasized solutions that limit interactivity. John recommended a consensus rule change to deal with the "thundering herd" problem by basing timeout-tree expirations on low-fee block occurrences.
The email defines user categories as "casual" or "dedicated," discussing trust assumptions and different scaling aspects: onboarding, transactional, and user resource scaling. It questions the feasibility of casual users engaging in future time-bound actions and highlights concerns about fund access, mempool congestion, and fee risk mitigation.
The correspondence outlines critical issues in off-chain scaling, such as enforcement costs in channel factories and the trade-off between trust and capital efficiency. The paper suggests tolerating an increase in transactions for rule enforcement in mature systems. It contemplates the role of "dedicated users" within the fee structure and the balancing act between capital commitment and efficiency.
The email proposes covenant-based solutions like CheckTemplateVerify (CTV) or AnyPrevOut (APO) for creating scalable channels without all participants' signatures. This approach reduces the need for co-owning on-chain UTXOs, enhancing scalability. It recommends integrating simple covenants and off-chain transaction methods into Bitcoin's consensus rules to reduce the on-chain footprint and facilitate off-chain operations, making the Lightning Network more accessible for payments.