Rational Economic Behaviours in the Bitcoin Lightning Network

The Lightning Network (LN) is designed to improve the scalability of the Bitcoin blockchain by using off-chain payments to settle transactions in a faster, cheaper, and more private manner. This work aims to empirically study LN’s fee revenue for network participants. Under realistic assumptions on payment amounts, routing algorithms and traffic distribution, we analyze the economic returns of the network’s largest routing nodes which currently hold the network together, and assess whether the centralizing tendency is incentive-compatible from an economic viewpoint. Moreover, since recent literature has proved that participation is economically irrational for the majority of large nodes, we assess how network topology changes when participants start behaving rationally.