Hi everyone,
I’ve been reflecting on the various strategies for managing fees and ROI. While we’re all looking for a solid yield, I’m becoming increasingly skeptical of aggressive techniques specifically the constant opening and closing of channels to chase profit.
In my view, this approach is problematic for a few reasons that go beyond just the math:
- On-chain overhead: High-frequency flipping often results in a significant portion of the yield being swallowed by on-chain fees, which feels counter-intuitive to efficient liquidity management.
- Network Fairness: Constant closing prevents smaller or newer nodes from establishing a "reputation" or gaining history. If we don't allow channels to mature, we’re essentially gatekeeping the network’s growth.
- Peer Growth: Every time a channel is closed prematurely, the peer on the other side loses the opportunity to route and grow. I believe a healthy ecosystem needs stability to allow diverse nodes to thrive, not just a race to the bottom by a few aggressive players.
I prefer focusing on long-term, stable connections. It feels more "fair" and contributes to a more robust, decentralized infrastructure where everyone has a chance to scale, not just those constantly flipping liquidity.
How do you all balance your yield targets with being a "good citizen" of the network? Do you think long-term stability outweighs the potential gains of aggressive channel management?
Your mind definitely is not ready for Bitcoin and especially for managing a LN node.
In this period of the beginning of LN, bitcoiners goal is NOT to pursue "profit" or "yield" from running a LN node.
Yes, there are costs and each operator must seek how to keep a balance between costs and earned fees from routing.
The main goal should not be "chase profit" but maintain a sane and reliable LN node with good liquidity.
Also let's mention an important aspect: THERE ARE 2 TYPES OF LN NODES - public and private. Only public ones can route payments.
I wrote several guides about these aspects here, please read them all:
https://darth-coin.github.io/nodes/nodes-en.html
The on-chain overhead point is the clearest argument against high-frequency flipping — at current fee levels, chain fees for open/close cycles can easily exceed what you earn in routing over the same period.
A few principles that seem to hold up in practice:
Flow follows topology, not fee tactics
Nodes that route consistently tend to sit between natural demand clusters — exchanges, wallets, merchants. Forcing flow by undercutting fees usually just means routing at a loss until the next node matches you. The corridor matters more than the fee.
Rebalancing has a cost floor
Whether on-chain or circular, every rebalance costs fees. Sustainable operation means routing income comfortably exceeds that floor. Aggressive channel churn makes it almost impossible to measure that honestly.
Reliability compounds
Peers and pathfinding algorithms prefer stable, well-connected channels. A node known for frequent closures gets deprioritized. The yield from a trusted long-running channel over 12 months often beats a portfolio of churned ones.
The operators I find most credible treat liquidity like capital allocation — patient, selective, focused on durable corridors. Chasing yield through churn usually means racing to the bottom on fees while paying the most in chain costs.