90% of Bitcoin Lightning Network transactions are centralized in a few nodes

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Key facts:
  • According to theory, centralization poses risks to the Bitcoin Lightning Network.

  • Few node nodes encompass more and more Lightning Network channels and liquidity.

The Lightning network, Bitcoin’s second layer solution, is showing signs of centralization that could pose risks to its security, according to specialists.

According to one recent research, 9 out of 10 transactions is transmitted through the payment channels managed by 10% of the nodes of this network.

That is 10% of all network nodes control 90% of all Lightning transactions, according to a team of researchers from different universities and institutes in Germany and Austria, as well as a member belonging to the Blockstream company.

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90% of Bitcoin Lightning Network transactions are centralized in a few nodes

We find that there is a trend of increasing centralization and a high level of inequality, where a small portion of the nodes participate in most of the transaction paths. We show that the level of centralization also depends on the size of the transaction, and we take a look at some of the best-ranked nodes. We reveal that a considerable proportion of nodes remained at the top during the period examined. To give an example, our analysis shows that 10% of all nodes control the vast majority of all transaction paths, and that their control increases over time.

Short Paper: A Centrality Analysis of the Lightning Network

90% of Bitcoin Lightning Network transactions are centralized in a few nodes
Lightning centralization rate from 2019 to 2021. Source: Short Paper: A Centrality Analysis of the Lightning Network.

The researchers used the following methodology: take the log of messages and notifications sent between nodes over 2 years to establish several timestamps, which would serve to compare the centralization parameters of the network at each of those moments. .

Additionally, they used the Gini coefficient methodology, which is used to measure economic inequality in social groups. In this research, this coefficient was applied to assess the distribution of channels between the nodes, discovering that the inequality of these with respect to the network increased by 10% during the period studied (2019-2021).

90% of Bitcoin Lightning Network transactions are centralized in a few nodes
Gini coefficient in percentage rate in Lightning based on timestamps. Source: Lightning centralization rate from 2019 to 2021.

What are the risks of node centralization in Lightning?

Although the researchers do not delve into the reasons, they do point to other research that explains the risks posed by the centralization of Lightning nodes and payment channels and other computer networks.

For example, it could generate problems when rebalancing channels, where one of the nodes decides to empty a channel, leaving the creditors of said funds without funds.

They also mention denial of service (DoS) attacks, which consist of saturating a node with many requests, hindering its performance.

Also, an attacker could end up violating the privacy of users by positioning themselves in the payment route to a centralized node, capturing the data of those who transmit payments to it and using it for evil.

Not to mention the risks of censorship, where a user can be banned from the network by other nodes, making it impossible for them to send payments.

90% of Bitcoin Lightning Network transactions are centralized in a few nodes
Acinq is one of the operators with the most nodes and channels in Lightning. Source: LNRouter.

There are currently 34,152 channels and 965,000 nodes in the Lightning network, with a capacity of 3,393 BTC, more than 130 million dollars, as shown by the 1ML explorer.

CriptoNoticias has reported on the centralization of the Lightning network, as this could be negative in terms of the dependence that users have on existing nodes and channels.

While it is desirable that the network could be more decentralized, to reduce the aforementioned risks, Lightning nodes are valued according to their stability and connectivity in the network, as well as the prices they can offer their users (who will prefer cheap commissions). , so that the competition between the nodes could be classified as fair, Even if the results are mixed.

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