Reasons why Lightning is not that great


Some Bitcoiners, me included, were fooled by hyperbolic discourse that presented Lightning as some magical scaling solution with no flaws. This is an attempt to list some of the actual flaws uncovered after 5 years of experience. The point of this article is not to say Lightning is a complete worthless piece of crap, but only to highlight the fact that Bitcoin needs to put more focus on developing and thinking about other scaling solutions (such as Drivechain, less crappy and more decentralized trusted channels networks and statechains).

Unbearable experience

Maintaining a node is cumbersome, you have to deal with closed channels, allocating funds, paying fees unpredictably, choosing new channels to open, storing channel state backups – or you’ll have to delegate all these decisions to some weird AI or third-party services, it’s not feasible for normal people.

Channels fail for no good reason all the time

Every time nodes disagree on anything they close channels, there have been dozens, maybe hundreds, of bugs that lead to channels being closed in the past, and implementors have been fixing these bugs, but since these node implementations continue to be worked on and new features continue to be added we can be quite sure that new bugs continue to be introduced.

Trimmed (fake) HTLCs are not sound protocol design

What would you tell me if I presented a protocol that allowed for transfers of users’ funds across a network of channels and that these channels would pledge to send the money to miners while the payment was in flight, and that these payments could never be recovered if a node in the middle of the hop had a bug or decided to stop responding? Or that the receiver could receive your payment, but still claim he didn’t, and you couldn’t prove that at all?

These are the properties of “trimmed HTLCs”, HTLCs that are uneconomical to have their own UTXO in the channel presigned transaction bundles, therefore are just assumed to be there while they are not (and their amounts are instead added to the fees of the presigned transaction).

Trimmed HTLCs, like any other HTLC, have timelocks, preimages and hashes associated with them – which are properties relevant to the redemption of actual HTLCs onchain –, but unlike actual HTLCs these things have no actual onchain meaning since there is no onchain UTXO associated with them. This is a game of make-believe that only “works” because (1) payment proofs aren’t worth anything anyway, so it makes no sense to steal these; (2) channels are too expensive to setup; (3) all Lightning Network users are honest; (4) there are so many bugs and confusion in a Lightning Network node’s life that events related to trimmed HTLCs do not get noticed by users.

Also, so far these trimmed HTLCs have only been used for very small payments (although very small payments probably account for 99% of the total payments), so it is supposedly “fine” to have them. But, as fees rise, more and more HTLCs tend to become fake, which may make people question the sanity of the design.

Tadge Dryja, one of the creators of the Lightning Network proposal, has been critical of the fact that these things were allowed to creep into the BOLT protocol.


Routing is already very bad today even though most nodes have a basically 100% view of the public network, the reasons being that some nodes are offline, others are on Tor and unreachable or too slow, channels have the balance shifted in the wrong direction, so payments fail a lot – which leads to the (bad) solution invented by professional node runners and large businesses of probing the network constantly in order to discard bad paths, this creates unnecessary load and increases the risk of channels being dropped for no good reason.

As the network grows – if it indeed grow and not centralize in a few hubs – routing tends to become harder and harder.

While each implementation team makes their own decisions with regard to how to best way to route payments and these decisions may change at anytime, it’s worth nothing, for example, that CLN will use MPP to split up any payment in any number of chunks of 10k satoshis, supposedly to improve routing success rates. While this often backfires and causes payments to fail when they should have succeeded, it also contributes to making it so there are proportionally more fake HTLCs than there should be, as long as the threshold for fake HTLCs is above 10k.

Payment proofs are somewhat useless

Even though payment proofs were seen by many (including me) as one of the great things about Lightning, the sad fact is that they do not work as proofs if people are not aware of the fact that they are proofs. Wallets do all they can to hide these details from users because it is considered “bad UX” and low-level implementors do not care very much to talk about them at all. There have been attempts from Lightning Labs to get rid of the payment proofs entirely (which at the time to me sounded like a terrible idea, but now I realize they were not wrong).

Here’s a piece of anedocte: I’ve personally witnessed multiple episodes in which Phoenix wallet released the preimage without having actually received the payment (they did receive a minor part of the payment, but the payment was split in many parts). That caused my service, @lntxbot, to mark the outgoing payment as complete, only then to have to endure complaints from the users because the receiver side, Phoenix, had not received the full amount. In these cases, if the protocol and the idea of preimages as payment proofs be respected, should I have been the one in charge of manually fixing user balances?

Another important detail: when an HTLC is sent and then something goes wrong with the payment the channel has to be closed in order to redeem that payment. When the redeemer is on the receiver side, the very act of redeeming should cause the preimage to be revealed and a proof of payment to be made available for the sender, who can then send that back to the previous hop and the payment is proven without any doubt. But when this happens for fake HTLCs (which is the vast majority of payments, as noted above) there is no place in the world for a preimage and therefore there are no proofs available. A channel is just closed, the payer loses money but can’t prove a payment. It also can’t send that proof back to the previous hop so he is forced to say the payment failed – even if it wasn’t him the one who declared that hop a failure and closed the channel, which should be a prerequisite. I wonder if this isn’t the source of multiple bugs in implementations that cause channels to be closed unnecessarily. The point is: preimages and payment proofs are mostly a fiction.

Another important fact is that the proofs do not really prove anything if the keypair that signs the invoice can’t be provably attached to a real world entity.

LSP-centric design

The first Lightning wallets to show up in the market, LND as a desktop daemon (then later with some GUIs on top of it like Zap and Joule) and Anton’s BLW and Eclair wallets for mobile devices, then later LND-based mobile wallets like Blixt and RawTX, were all standalone wallets that were self-sufficient and meant to be run directly by consumers. Eventually, though, came Breez and Phoenix and introduced the “LSP” model, in which a server would be trusted in various forms – not directly with users’ funds, but with their privacy, fees and other details – but most importantly that LSP would be the primary source of channels for all users of that given wallet software. This was all fine, but as time passed new features were designed and implemented that assumed users would be running software connected to LSPs. The very idea of a user having a standalone mobile wallet was put out of question. The entire argument for implementation of the bolt12 standard, for example, hinged on the assumption that mobile wallets would have LSPs capable of connecting to Google messaging services and being able to “wake up” mobile wallets in order for them to receive payments. Other ideas, like a complicated standard for allowing mobile wallets to receive payments without having to be online all the time, just assume LSPs always exist; and changes to the expected BOLT spec behavior with regards to, for example, probing of mobile wallets.

Ark is another example of a kind of LSP that got so enshrined that it become a new protocol that depends on it entirely.

Protocol complexity

Even though the general idea of how Lightning is supposed to work can be understood by many people (as long as these people know how Bitcoin works) the Lightning protocol is not really easy: it will take a long time of big dedication for anyone to understand the details about the BOLTs – this is a bad thing if we want a world of users that have at least an idea of what they are doing. Moreover, with each new cool idea someone has that gets adopted by the protocol leaders, it increases in complexity and some of the implementors are kicked out of the circle, therefore making it easier for the remaining ones to proceed with more and more complexity. It’s the same process by which Chrome won the browser wars, kicked out all competitors and proceeded to make a supposedly open protocol, but one that no one can implement as it gets new and more complex features every day, all envisioned by the Chrome team.

Liquidity issues?

I don’t believe these are a real problem if all the other things worked, but still the old criticism that Lightning requires parking liquidity and that has a cost is not a complete non-issue, specially givent he LSP-centric model.

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  • The place of Drivechain in Bitcoin’s future

    Assuming that will happen, we’ll be faced with a problem: as people try to use it as money they will necessarily, by lack of other options, have to use some custodial solution or some proto-custodial solution, maybe using Lightning as a settlement layer between big custodians*? I don’t know. No one is happy with that solution, and rightfully so, since it is very dangerous. A small set of custodians can easily be captured by governments and they can slowly turn Bitcoin into fiat money like they did with gold.

    I actually think Bitcoiners should put more thought on how to create a custodian network that scales easily without having to be centralized in a small set of providers like Lightning is, and this is kind of the point of James’s article too.