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The evolving topology of the Lightning Network: Centralization, efficiency, robustness, synchronization, and anonymity

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  • Stefano Martinazzi
  • Andrea Flori

Abstract

The Lightning Network (LN) was released on Bitcoin’s mainnet in January 2018 as a solution to favor scalability. This work analyses the evolution of the LN during its first year of existence in order to assess its impact over some of the core fundamentals of Bitcoin, such as: node centralization, resilience against attacks and disruptions, anonymity of users, autonomous coordination of its members. Using a network theory approach, we find that the LN represents a centralized configuration with few highly active nodes playing as hubs in that system. We show that the removal of these central nodes is likely to generate a remarkable drop in the LN’s efficiency, while the network appears robust to random disruptions. In addition, we observe that improvements in efficiency during the sample period are primarily due to the increase in the capacity installed on the channels, while nodes’ synchronization does not emerge as a distinctive feature of the LN. Finally, the analysis of the structure of the network suggests a good preservation of nodes’ identity against attackers with prior knowledge about topological characteristics of their targets, but also that LN is probably weak against attackers that are within the system.

Suggested Citation

  • Stefano Martinazzi & Andrea Flori, 2020. "The evolving topology of the Lightning Network: Centralization, efficiency, robustness, synchronization, and anonymity," PLOS ONE, Public Library of Science, vol. 15(1), pages 1-18, January.
    • Handle: RePEc:plo:pone00:0225966
    DOI: 10.1371/journal.pone.0225966
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    Cited by:

    1. Chu, Meifen, 2021. "Bitcoin and traditional currencies during the Covid-19 pandemic period," MPRA Paper 110117, University Library of Munich, Germany.
    2. Divakaruni, Anantha & Zimmerman, Peter, 2023. "The Lightning Network: Turning Bitcoin into money," Finance Research Letters, Elsevier, vol. 52(C).
    3. Zabka, Philipp & Förster, Klaus-T. & Decker, Christian & Schmid, Stefan, 2024. "A centrality analysis of the Lightning Network," Telecommunications Policy, Elsevier, vol. 48(2).
    4. Stefano Martinazzi & Daniele Regoli & Andrea Flori, 2020. "A Tale of Two Layers: The Mutual Relationship between Bitcoin and Lightning Network," Risks, MDPI, vol. 8(4), pages 1-18, December.
    5. Kiana Asgari & Aida Afshar Mohammadian & Mojtaba Tefagh, 2022. "DyFEn: Agent-Based Fee Setting in Payment Channel Networks," Papers 2210.08197, arXiv.org.
    6. Lin, Jian-Hong & Marchese, Emiliano & Tessone, Claudio J. & Squartini, Tiziano, 2022. "The weighted Bitcoin Lightning Network," Chaos, Solitons & Fractals, Elsevier, vol. 164(C).

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