From the Archives A Lightning Retail Case Study: Bitrefill
In May 2019, we sat down with the Bitrefill team to internally learn more about Lightning retail adoption. Now that the year's winding down, we are releasing some of the highlights from that conversation.
1. Challenges in accepting / maintaining Lightning node and channels as a retail business
Bitrefill team: Node issues when scaling up. Few to no other services have as many channels as we do so we often run into new performance issues which we report to Lightning developers. This has been less of an issue lately, and we have redundant nodes running different implementations for fallback.
Getting users Lightning wallets. Accessibility and ease of use are major challenges, there are no non-custodial Lightning wallets live on iOS (at time of writing). There are custodial wallets on iOS/Android that are rough on the edges but generally work.
Other challenges include removing liquidity off of our node. This is also amplified by us having a channel opening service to help other retail businesses and user receive payments of Lightning easily (Lightning torch as an example).
2. Fee economics around your node
Bitrefill team: It's useful for us to accept incoming payments and not need to do consolidation of lots of utxos - which is expensive on chains like BTC and ETH. We have some earnings from selling Thor channels.
We charge higher fees than most to route, but not much higher. Future improvement include charging less fees for widely unbalanced channels that are dynamic. Other plans include closing channels that aren’t used in x time.
We avoid small channels opened to us to avoid on chain fees for consolidation. Small channels also earn less fees and are less likely to have any routing activity, meaning they can carry a liquidity cost. Those users can currently connect to routing nodes run by volunteers or wallets, or use our premium Thor service to have a channel with us.
Thor can be easiest thought of as an ISP for Lightning channel capacity - it connects your home node to the monetary superhighway network that is LN
3. How much volume (or percentage of volume) are you seeing via Lightning
Bitrefill team: At time of writing, Lightning payments are currently at 5% of unique payments received by us, growing at ~35% monthly. In EUR amounts it's less than 5% because Lightning transactions are currently capped in size, so the average transaction size is lower than other payment methods.
The % of tx happening with Lightning is on the same order of magnitude as we see with Ethereum which is the largest of our supported altcoins.
4. What are support requests you're seeing with Lightning
Bitrefill team: Not as many as one might think. We do have Lightning support issues with wallet bugs sending payments after expiration or bugs in lightning implementations but issues have been almost non-existent lately. Majority of requests are users wanting to use our Thor product with wallets that have not added support yet.
We have vastly more more support requests with altcoins paying partial amounts or even with regular bitcoin. We do have users once in a while have issues being unable to pay us due to routing issues, but that’s more on them not opening channels with nodes that can send to us. Lightning Labs is working on improving this by having nodes connect and open channels to nodes that score high on their routing metrics.
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