Routing

Aimed for forwading 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

  • graetly 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 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