BitMEX Research has released a new report on the Lightning Network’s justice mechanism, concluding that it exhibits a “reasonable degree of justice”.
The report was released on the BitMEX blog and examines the Lightning Network’s punishment mechanism called ‘justice transactions’.
It provides an examination of Lightning channel closure scenarios and the incentives to punish dishonest parties and prevent them from stealing funds.
The report then goes on to present data on the prevalence of this type of transaction on the Bitcoin network.
BitMEX Research has potentially identified 241 justice transactions, representing 2.22 Bitcoin in terms of value since the Lightning Network launched at the end of 2017.
By design, when a thief is caught attempting to steal funds on the Lightning Network, they lose not only the funds they attempted to steal, but also all the funds in the relevant channel.
This is a “punishment” to act as a deterrent – often referred to as “justice”.
BitMEX Research manually constructed a justice transaction in an arbitrary scenario.
The experiment proved to be successful and ultimately provided some assurance that the security mechanism works – if you try to steal funds, you will be punished.
Not all of the 241 justice transactions indicate genuine dishonesty. For example, BitMEX Research was responsible for 5 of the 241 justice transactions in its experiment. In those scenarios, there was no victim as BitMEX owned all the nodes and funds.
2.22 Bitcoin is also a reasonably small amount relative to the size of the Lightning Network, which has roughly 911 Bitcoin locked in channels – according to data collected on 1ml.com.
Conclusion
The report concludes: “In order for the Lightning Network to succeed as a robust, reliable, and scalable payment system, the justice mechanism needs to be effective at deterring and preventing theft.
“As for the optimal justice rate, this is hard to determine. If it is too high, it will show that successful thefts may be too prevalent and the threat of justice may not be sufficient.
“If it is too low, it may mean nobody is attempting theft, thereby increasing the risk that users do not monitor their channels. This may lead to increases in the risk of large systematic channel thefts in the future.
“For now, at least according to the data we have analysed, there appears to be a reasonable degree of justice on the burgeoning Lightning Network.”
It would seem that the Lightning Network’s justice mechanism is sufficiently handling the threat of any would-be thieves for now, though there is room for improvement when considering the optimal justice rate.
Interested in reading more Lightning Network-related stories? Discover more about Lightning Labs launching a Lightning Network mainnet mobile app.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.