1335 sats \ 3 replies \ @k00b 30 Oct 2023 \ on: Will Lightning Network lead to the centralisation of LSPs? bitcoin
LSPs are by definition centralizing lightning operations. If the protocol continues to require them to meet UX expectations, then the average lightning experience will only ever be as decentralized as LSPs.
Given that software progress isn't static, you can expect more LSPs to emerge, more LSP implementations to emerge, and LSPs to be interchangeable ... all of which is actively happening. You can also expect the lightning protocol and nodes to absorb functionality provided by LSPs over time, as LSPs are kind of front running the needs of protocol users, and for the functionality of LSPs to eventually be provided piecemeal.
Lightning is software. It can change for good and for bad. If we don't like it one way, we'll try to make it another way. The biggest centralization risk is becoming complacent with centralized solutions.
What I'd expect is that the majority of activity to be unfolding in these relatively "centralized" lightning enclaves, which are nicer and easier to use; but for (less-nice * less-centralized) versions to continue to exist, and that the latter will be useful in keeping the former honest, and for keeping them from getting cracked down on, mostly. Thoughts?
(This is the same logic that convinces me that shitcoins will be around for the long haul, bc the existence of btc provides cover for them. The government is like: "Even if we crack down on Eth / Solana / Tron / XRP, there will still be btc, which we can't realistically crack down on using these same tools; so we might as well not really try until we're ready to go all the way.")
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I think that's right on both fronts. LSPs are kind of the technological event horizon and are centralized as is the usual case even with technology destined for decentralization. Theoretically, you're not trusting an LSP (financially) more than a normal lightning peer, so LSPs should mostly compete on service quality. This should lend itself to a robust-ish LSP-dominated hub and spoke network even if it isn't the mesh network ideal. The cheaper and easier lightning nodes become to run, the less LSPs are needed. Lightning nodes are just not cheap and easy to run right now.
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Right, things change fast. Zeus as an example works with 2 different LSPs: OLYMPUS by Zeus (https://0conf.lnolymp.us) and Voltage (https://lsp.voltageapi.com). Users can decide and switch as they like.
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