Lightning Network can not grown to large scale even if most of its problems were solved

Lets supose that Lightning Network does not have routing problems and that all transactions being routed by half a dozen of hubs is not a problem.

It still have a huge problem: Liquidity.

Lets say that you want to be a LN hub, and you want to provide $1000 of liquidity to every users connected to you.

That means that if you want to have 1000 people using your hub, you will need to lock $1 million in Bitcoins, now imagine providing liquidity for a network with large adotption?

Now tell me, who will lock up millions or billions of Bitcoins to gain a very small amount of fees? Most people will pay 0.1% fees or less, and if the hub try to raise the fee, people will just use another hub.

So Lightning network can only have a few thousand of BTC locked up by benevolent users who want to see the tech grown, but it provides very little incentive to rational actors, lending BTC to a DEX like Uniswap is much more profitable than providing liquidity to LN.

So the only way i see that providing liquidity to LN is profitable, is if there is only 1 hub that have a monopoly on the transaction routing and that on chain fees are very high, like $50 or more (wich BTC devs want, so that BTC can be secure).

So that the hub will not have any competitors and can charge high fees, like 1% or more, so that people will accept the high fees since they will be lower than on-chain fees.

I doubt that LN will reach at this state, in the future most of BTC users will be millionaries, companies, etc. Entities that transact very large amounts and do not care about the on-chain fees, fees will be so high that most people will not even be willing to open a LN channel, just migrating to BCH or other cheap cryptos.

If there will not be a monopoly of hubs and on-chain fees do not rise to insane levels, LN will never have a good amount of liquidity and simply become a niche technology that nobody uses.

The only fate of LN is failure.

submitted by /u/Nerd_mister to r/btc
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Quelle: bitcoin-en