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You are locking the bitcoin in a sense that if you deploy it (use it to buy something else), your node won't have any money to route anything. That's what I ment. Like... I don't know... Opportunity cost (and the fact that funds would be safer in non-hot wallet).
I'm just saying that your node's capacity can be multiples of your own capital, so your yield isn't really correlated to how much you keep hot... but how much peering you attract for other reasons (CashApp example)
funds would be safer in non-hot wallet
This is also a good point as to why chasing yield is dumb
I don't really care about yield itself. I more about care whether there is a possibility with time the routing nodes to become less in number.
There's no such thing as a routing node, just nodes, some just route better than others.
The network is still small, so overall I expect they'll increase, but not relative to overall growth.
LOL. There certainly are non-routing nodes. I have one running on my phone.
That doesn't make one not on your phone a routing node, a node is a node, they are not distinct functions.
Yours is an edge node.
Am I using a wrong word here? What is the correct term for a non-edge node that routes payments through it?
"Routing node" implies routing as a role, they're just... nodes.
Finance trends towards centralization generally, centralization is efficient
Economies of scale apply to larger lightning nodes like any other good or service
Edges have an incentive to connect to hubs in many cases because less hops = efficiency
That said, there is no real "moat" a pure Lightning node has. The network is about as flat as one could possibly be. The biggest nodes belong to services of other value-added things or external distribution, which in-turn attracts organic peering.
This is the biggest misconception, and one of the reasons yield chasing is dumb. Nodes raking in high "yield" achieve that largely do to other peoples liquidity. CashApp famously boasts their 10% APY, but thats not 10% APY on their capital, by servicing an exchange they attract peers and are earning yield off other peoples capital.
A bank without depositors is just a bond holder, banks make money off other peoples cash.