In the last research report published on July 15, 2019, Bitmex analyzes the Bitcoin Lightning Network with respect to channel closure.
The research is focused on a mechanism called “Justice Transactions” that punish dishonest parties and prevent them from stealing funds from other Lightning channels. According to the report, 241 Justice transactions were identified, representing 2.22 bitcoin in value, since the Lightning Network was launched at the end of 2017.
Justice Has Been Served
On July 15, 2019, Bitmex published its third report on the Lightning Network concerning channel closures and the incentives designed to prevent dishonest lightning nodes from stealing funds by broadcasting an earlier channel state.
To prevent this behavior, the lightning network enables a defense system named “justice transactions” which involve the closure of the suspicious channel. It should be noted that the punishment is not limited to the loss of the funds linked with the theft but also concerns all the bitcoin in the relevant channel.
The study analyzed transactions which appear to be justice channel closures, dating back as far as December 2017 when the Lightning Network was effectively launched. Data collected goes up to June 2019 and identifies a total of 241 possibly dishonest transactions which corresponds to a total of 2.22 bitcoin.
(Source: Bitmex)
Bitmex used its own methodology to search for justice transactions, which was described as a “basic search methodology.” The research also proposes an alternative method developed by Alex Bosworth, from Lightning Labs, that may be more robust.
It is important to specify that the 2.22 BTC represents the total funds claimed by honest non-channel closing nodes but this does not necessarily mean that thieves tried to steal all that money. Dishonest nodes may have punished thieves by an amount larger than the value they tried to steal hence swelling the figure.
Plus, this number could include some users that were trying to test the efficiency of the Network. For example, BitMEX itself is responsible for five of the 241 transactions. In this case, however, there was no loss of funds as BitMEX owned all the nodes and funds stolen.
A Broader Perspective
According to 1ml.com, the Lightning Network counts 9,064 nodes with 32,303 channels and a network capacity of 896 BTC. Therefore, 241 justice transactions, with a value of 2.2 BTC corresponds to only 0.7 percent of the current number of lightning channels, a reasonably small value relative to the size of the Lightning Network.
Justice transactions will play a vital role in making the Lightning Network a robust, reliable, and scalable payment system. The report notes that it is still too early to understand the optimal justice rate as too high a value would mean that successful thefts may be too prevalent.
On the contrary, a very low value would mean that nobody is attempting theft. This could lead to less monitoring over the channels thus increasing the risk of channel thefts in the future.
The Lightning Network is spreading its branch of action as discussed previously on BTCManager. The technology was recently integrated for Coinbase users and on the peer-to-peer cryptocurrency trading platform Hodl Hodl. It appears that the layer two solution is slowly becoming a standard.
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