Topological Evolution Analysis of Payment Channels in the Lightning Network

Abstract

Payment channel networks (PCN) offer a fast, secure, and distributed alternative payment method while avoiding slow consensus mechanisms of blockchains. Nonetheless, the PCN topology directly influences the performance, cost, and payment success rate. This paper 1 analyzes the evolution of the Lightning Network topology, which is currently the leading payment channel network. We reconstruct the network graph using real data from a set of channel announcement messages collected between January 2020 and August 2021. Our analysis uses typical graph metrics, such as transitivity, diameter, and degree centrality, to evaluate the state and evolution of the network. The results show a strong trend in resource and connectivity centralization. Only 0.38% of nodes concentrate 50% of the network capacity, exposing a vulnerability to targeted attacks. As with the Bitcoin cryptocurrency, the centralization of the Lightning PCN directly contrasts with the original goal of a fully-decentralized network. Moreover, the low network transitivity compromises channel rebalancing techniques, which contribute to the stability of the system. This trend evidences the need for new attachment policies prioritizing greater network decentralization and robustness.