when someone does initiate a rebalance, they might be shifting other nodes’ balances in directions those nodes don’t want.
Isn't this what routing fees are for? If I don't want my channel to drain in a particular direction, I have the ability to price the cost of drain at whatever PPM I think is fair.
Each node gossips their channels’ surplus outbound to peers using LND’s custom P2P messages
So it sounds like rebalances using this system aren't "free", rather, you pay by loss of privacy.
I’m looking for code review and feedback on the design.
This sounds like a secondary fee market on-top of Lightning's default Gossip-layer. But the requirement of this market is that all rebalances are nominally "free". However, there is no free lunch so I challenge you to think of what else might be "exchanged" to compensate for these rebalances. If the goal is aligning "coincidence of wants" in some kind of barter-protocol (trade inbound for outbound 1:1 with no fees) then I would call it "neat" and "niche" -- because barter does not scale like prices set in a free-market.
Isn't this what routing fees are for? If I don't want my channel to drain in a particular direction, I have the ability to price the cost of drain at whatever PPM I think is fair.
You acknowledge that even "perfectly priced" fees still result in depletion over time. Depleted inbound must be restored through new channel opens, loop-ins, or rebalancing. Of those options, rebalancing is cheapest. Free rebalancing is cheaper still.
So it sounds like rebalances using this system aren't "free", rather, you pay by loss of privacy.
Channel balances are already observable. Anyone can probe them. There is no loss in privacy relative to the status quo. Right now, eddy assumes the user desires a 50/50 liquidity split, but there's no reason why this couldn't be custom per channel (it's in the roadmap).
This sounds like a secondary fee market on-top of Lightning's default Gossip-layer. But the requirement of this market is that all rebalances are nominally "free". However, there is no free lunch so I challenge you to think of what else might be "exchanged" to compensate for these rebalances. If the goal is aligning "coincidence of wants" in some kind of barter-protocol (trade inbound for outbound 1:1 with no fees) then I would call it "neat" and "niche" -- because barter does not scale like prices set in a free-market.
You're right that it's barter. The exchange is liquidity-for-liquidity. Barter doesn't scale like prices in general markets, but this is actually a case where price discovery is hampering the scalability of the lightning network. Routing fees are the root of both problems eddy solves:
Asymmetric fees make the network more expensive and less reliable over time^1
Rebalancing has a free-rider problem. Node operators hope others rebalance first.^2
By eliminating fee overhead and the free-rider delay, rebalances happen more frequently which improves network reliability at scale.
I think it's wrong to read René's work and come to the conclusion that mainnet is degraded because fees are asymmetric.
René makes the proof that even in a perfectly circular economy, one where aggregate demand is balanced and there's no net directional flow, asymmetric fees alone are sufficient to degrade this kind of payment channel network.
This is excellent graph theory, but the current lightning network demand flows are nowhere near perfectly circular! The real mainnet is full of sinks and sources, not circular at all.
The free-rider problem isn't eliminated with this design, it's just moved the goal post from "who will pay to rebalance?" to "who will run the rebalance infrastructure?" -- which is actually pretty interesting.
If a small cluster was running this, it could improve the liquidity conditions for nodes that aren't even paying attention to the secondary fee market. Keep working on this!
Isn't this what routing fees are for? If I don't want my channel to drain in a particular direction, I have the ability to price the cost of drain at whatever PPM I think is fair.
So it sounds like rebalances using this system aren't "free", rather, you pay by loss of privacy.
This sounds like a secondary fee market on-top of Lightning's default Gossip-layer. But the requirement of this market is that all rebalances are nominally "free". However, there is no free lunch so I challenge you to think of what else might be "exchanged" to compensate for these rebalances. If the goal is aligning "coincidence of wants" in some kind of barter-protocol (trade inbound for outbound 1:1 with no fees) then I would call it "neat" and "niche" -- because barter does not scale like prices set in a free-market.
You acknowledge that even "perfectly priced" fees still result in depletion over time. Depleted inbound must be restored through new channel opens, loop-ins, or rebalancing. Of those options, rebalancing is cheapest. Free rebalancing is cheaper still.
Channel balances are already observable. Anyone can probe them. There is no loss in privacy relative to the status quo. Right now, eddy assumes the user desires a 50/50 liquidity split, but there's no reason why this couldn't be custom per channel (it's in the roadmap).
You're right that it's barter. The exchange is liquidity-for-liquidity. Barter doesn't scale like prices in general markets, but this is actually a case where price discovery is hampering the scalability of the lightning network. Routing fees are the root of both problems eddy solves:
By eliminating fee overhead and the free-rider delay, rebalances happen more frequently which improves network reliability at scale.
Thank you for the review, @count_null.
1: https://arxiv.org/pdf/2601.04835
2: https://ar5iv.labs.arxiv.org/html/1912.09555
I think it's wrong to read René's work and come to the conclusion that mainnet is degraded because fees are asymmetric.
René makes the proof that even in a perfectly circular economy, one where aggregate demand is balanced and there's no net directional flow, asymmetric fees alone are sufficient to degrade this kind of payment channel network.
This is excellent graph theory, but the current lightning network demand flows are nowhere near perfectly circular! The real mainnet is full of sinks and sources, not circular at all.
The free-rider problem isn't eliminated with this design, it's just moved the goal post from "who will pay to rebalance?" to "who will run the rebalance infrastructure?" -- which is actually pretty interesting.
If a small cluster was running this, it could improve the liquidity conditions for nodes that aren't even paying attention to the secondary fee market. Keep working on this!