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Routing

Aimed for forwarding payments successfully while generating profit.

Capital requirement

  • high

Channels and peers

  • numerous (~10+) big channels to well connected nodes
  • connect to the network edge to get usage
  • aim to connect node clusters (isolated groups)

Liquidity

  • balanced between local and remote overall
  • individual channels should be able to forward payments in both directions

Uptime

  • aim to be perfect
  • offline routing nodes with many public channels are causing networkwide payment failures
  • greatly affects the reputation of the routing node

Management

  • autorebalancing (cronjobs are useful)
  • create inbound and outbound liquidity as required
  • balance between multiple nodes
  • close inactive channels
  • open to directions where liquidity is required
  • use Lightning Pool, Amboss Magma or liquidity ads bids and asks
  • batch channel opens to save on miner fees
  • fund channels from external wallets
  • close to external addresses to reduce the hot wallet risk
  • explore the many tools available

Strategies

Connect clusters and big payment processors

  • bidirectional traffic
  • fees are low
  • highly competitive (lots of liquidity is in private channels)

Provide liquidity to merchants

  • high incoming liquidity required
  • fees can be set to moderate - high
  • selling channels via Lightning Pool often falls into this category

Payment hub for small nodes

  • fees can be left to be low
  • traffic is mostly outgoing
  • should encourage the usage of private channels
  • offline public channels lead to payment failures and affecting the routing node's reputation)

Sell incoming liquidity

  • LOOP
  • Bitfinex
  • set high fees due to unidirectional traffic and the quick drain of inbound capacity
  • not all LN supporting exchanges are connectable and need individual evaluation about the direction of traffic

Examples