lightning-dev

Hold fees: 402 Payment Required for Lightning itself

Hold fees: 402 Payment Required for Lightning itself

Original Postby Rusty Russell

Posted on: October 15, 2020 01:49 UTC

Joost Jager explains that hold fees don't need to be symmetric and a new node opening a channel to an established routing node will be forced to pay a hold fee but won’t receive any traffic if it announces a hold fee itself.

Reputation building is important for nodes to command hold fees. Routing nodes with a strong relationship may decide not to charge hold fees to each other at all. An attacker can establish channels to low-reputation nodes and then use them to grief a high-reputation node, but LOW-REP can charge an unknown node a hold fee and waive the hold fee for high-reputation nodes. If a node charges hold fees, it needs to be selective with whom it accepts HTLCs from and successful forwards can earn a routing fee compensating for the loss in hold fees. This mechanism can create interesting dynamics on the network and eventually reach an equilibrium that is healthy in terms of decentralization and privacy. However, creating rules for nodes using actual numbers may lead to complexity spiral as different ways of exploitation exist.