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301 sats \ 1 reply \ @SatoshiNakanodo 30 Oct 2022 freebie \ on: Unprofitable Lighting Node Operator here. AMA bitcoin
After just a few months running my own LN node, I think I’ve come to the conclusion that profitability can be achieved, but only after you've been running for a while, have opened a number of good sized channels, and have found a good mix of active channels that balance themselves to a degree by their natural flows.
Everyone's node is different, but the basic steps I have followed (based on my own learnings) go something like this:
  1. First, study node information available from Amboss and Lightning Terminal to identify peers to connect to. I aim for a mix of channels (both sinks and sources) with A. relatively low outgoing fees B. lots of good connections & growth C. relatively high rank for Betweenness / Hopness / Hubness
  2. Start by opening 10-15 balanced channels with a capacity of at least 2-5M sats each (larger if you can afford), either by rebalancing immediately after opening the channel, or by opening channels using 'Liquidity Swaps' at https://lightningnetwork.plus/ and then working with the other peers to rebalance for no fees.
  3. I set my channel fees fairly high at first (ie. >500ppm and >10 base fee)
  4. I set MAX HTLC at no more than 500,000 sats (most node operators ignore this setting or set their MAX HTLC very high, but I set mine low to take advantage of my 'Base Fee' by allowing the channel to be used multiple times instead of one or two large transactions depleting the liquidity)
  5. Wait and watch for a few hours to see if any movement occurs…
If movement occurs, I either leave fees alone or raise them incrementally until activity slows (being careful not to squash it completely)
If no movement occurs after a few hours, I begin reducing fees incrementally until liquidity starts to move (I generally use the same fees for all channels but may set certain channel fees higher if they get much higher usage)
When liquidity all moves to one side of a channel, routing activity will usually stop (especially when you're just starting out and don't have many channels). At this point I have two choices:
A. If I have enough funds on-chain I can open new channels that I think might complement my existing channels by pulling or pushing liquidity – essentially rebalancing my unbalanced channels for me.
B. Alternatively, I can rebalance my existing channels to feed the movement of liquidity and get things moving again.
-- In Conclusion... if you keep at it long enough you will eventually figure out the right fees and the right mix of channels that will keep you in the green. For now I have accepted the fact that I may have to operate at a loss for a while but I am helping the network to grow. Plus, it's a good way to learn.
-- Other resources I have found helpful...
• Four Tips for Running a Profitable Lightning Network Node by Erin Malone https://bitcoinmagazine.com/culture/four-tips-run-profitable-lightning-node
• Building a Lightning Network Node for Routing – Parts 1-3 https://voltage.cloud/blog/bitcoin-education/building-a-lightning-network-node-for-routing-part-1/
• How to run a Bitcoin Lightning Network node by BTCsessions https://youtu.be/KItleddMYFU
• Start and Manage a Bitcoin Lightning Node https://youtu.be/KItleddMYFU
• How to choose the right Lightning Network Channels for your Bitcoin node by Jonathan Levi https://youtu.be/Lojku8Tstyg
• Imbalance measure and proactive rebalancing for the Lightning Network https://youtu.be/KQX_cSenxNI
• Lightning 101: Node Profitability feat. Plebnet by Lightning Labs https://youtu.be/LRZy-VtCPe4
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0 sats \ 0 replies \ @alpacachino 31 Oct 2022
Useful, thanks!
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