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0 sats \ 0 replies \ @Brunswick 3 Jun 2022 \ on: LN transfer becoming more expensive than on-chain transaction bitcoin
The premise of lightning is that market forces will eventually drive fees to nearly zero. There is a foundation to this assumption as there is necessarily a floor that is dictated by minimal interest or dividends earned by a low-risk demand deposit. Let's presume a person's maximum profitability of an equivalent deposit is 0.1% APY. Divide this by the total funds passing through a profitable node, let's say it's 1000 to 1, this leaves you at around 10ppm which happens to be lower than the common fee rate on the network at this time. The reason it's not already this low is the channel-churn on any particular node is much lower than 1000:1. The reason it's not higher is because there is much pressure from idealistic nodes. The zerofeerouting method is a different business model of profiting from liquidity such that selling liquidity and swap ins/outs can also contribute to node sustainability thus driving down fee rates further.