Blockchain developer proposes rate card for Bitcoin Lightning node fees
Developer Lisa Neigut, known as NiftyNo, has posted a new proposal to allow Bitcoin Lightning Network nodes to advertise tiered pricing for forwarding fees. Her proposal would allow operators to broadcast Lightning node fees using four standardized tiers based on the capacity of their nodes.
Node operators may charge a proportionately higher price for channels that leave a buffer of outgoing capacity to carry future transactions. Suggestion suggests setting four levels based on the percentage of capacity open for future transactions. Neigut suggests standard levels of 0–25%, 26–50%, 51–75%, and 76–100%; and suggests four 16-bit integers to represent these percentage ranges.
She mentioned that more formal rate cards may also allow negative fee rates for some tiers. The current system of broadcasting fees through the so-called “gossip” text message system does not make it easy to set negative fees.
In the proposal, Neigut suggested that node operators already adjust their fees based on their channel capacity. The developer said that the four-level prize cards could give one more effective way of broadcasting one’s intentions than using Lightning Network’s gossip messages.
Read more: Bitcoin developer has solution to Lightning’s existential problem – offline payments
Of course, allowing negative fee rates would get rid of payment basis fees. It can also provide incentives to increase incoming capacity for frequently used channels.
Neigut credited Clara Shikleman for first suggesting negative fees as well as ZmnSCPxj’s comments about the variability of a Lightning channel’s liquidity value.
Reactions to Neigut’s proposal for Lightning node fees
Someone on the Lightning-Dev mailing list asked how users could calculate fees when opening a Lightning Network channel without using a third-party service to collect this information.
A member of the mailing list known as ZmnSCPxj responded: “The sender optimistically tries a route with a certain fee rate, and if that fails, tries another route”.
“If the lowest-cost path fails, you simply try another route that may have more hops but lower effective costs, or try the same channel at a higher cost.”
The few reactions to the proposal for a tiered price card on Twitter were mostly positive. Gigi, a Bitcoin mining analyst at Galaxy Digital, called it an excellent way to rebalance channels and reduce fees.
Who is Lisa Neigut?
Lisa Neigut joined Blockstream as a software engineer in 2018. Her previous experience includes a position as a software engineer for Square and an Android developer for Etsy. She is one influential Bitcoin and Lightning Network developer.
Her projects include development of the “Prometheus” plugin, which can send data from c-Lightning nodes to Prometheus to generate graphs of node statistics.
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