Difference between revisions of "Lightning Network Channel Dynamics Simulation"

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=Lightning Network Payment Channel Simulation=
 
  
==Introduction and Problem Definition==
 
This simulation models the Lightning Network payment channels systém. The simulation focuses on analyzing payment channel dynamics, network routing efficiency, and transaction success rates in a distributed payment network. The goal is to understand how different network parameters and routing algorithms affect the overall performance and reliability of the payment channel network.
 
 
==Model and Method==
 
The simulation uses an agent-based model approach where three types of agents (customers, merchants, and routers) interact through payment channels. The network is built using a graph structure where nodes represent agents and edges represent payment channels with specific capacities and balances.
 
 
==Environment==
 
The simulation environment consists of a 2D space where agents are randomly distributed. Each payment channel (edge) maintains:
 
* Total capacity
 
* Current balance in both directions
 
* Base fee
 
* Fee rate
 
* Connection status
 
 
==Agents==
 
 
===Customers (70% of nodes)===
 
* Shape: "person"
 
* Color: Blue
 
* Behavior: Initiate transactions to merchants
 
* Properties:
 
** Balance
 
** Pending transactions list
 
 
===Merchants (20% of nodes)===
 
* Shape: "house"
 
* Color: Red
 
* Behavior: Receive payments from customers
 
* Properties:
 
** Balance
 
** Pending transactions list
 
 
===Routers (10% of nodes)===
 
* Shape: "circle"
 
* Color: Yellow
 
* Behavior: Facilitate payment routing
 
* Properties:
 
** Balance
 
** Pending transactions list
 
 
==Variables==
 
 
===Network Configuration===
 
* '''num-nodes''': Total number of nodes in the network (10-500)
 
* '''avg-connections''': Average number of connections per node (2-10)
 
* '''max-connections''': Maximum allowed connections per node (4-10)
 
* '''mean-channel-capacity''': Average capacity of payment channels (1000-100000)
 
* '''min-channel-capacity''': Minimum capacity of payment channels (100-10000)
 
 
===Transaction Parameters===
 
* '''transaction-rate''': Rate of transaction generation (0-10)
 
* '''mean-tx-amount''': Average transaction amount (10-10000)
 
 
===System Variables===
 
* '''auto-rebalance?''': Toggle automatic channel rebalancing
 
* '''pathfinding-algorithm''': Choice between "dijkstra" and "a-star"
 
 
==Simulation Steps==
 
 
===Setup Phase===
 
* Clear previous simulation state
 
* Initialize global statistics
 
* Create nodes (customers, merchants, routers)
 
* Establish payment channels
 
* Set initial channel capacities and balances
 
 
===Go Phase (Repeated Each Tick)===
 
* Generate new transactions
 
* Customers randomly initiate payments to merchants
 
* Transaction amounts follow a lognormal distribution
 
 
* Process pending transactions
 
* Select path using chosen routing algorithm
 
* Attempt payment along selected path
 
* Update channel balances if successful
 
 
* Channel rebalancing (if enabled)
 
* Identify unbalanced channels
 
* Adjust balances toward optimal distribution
 
 
* Update statistics and visualizations
 
 
==Pathfinding Algorithms==
 
 
===Dijkstra's Algorithm===
 
* Traditional shortest path algorithm
 
* Considers hop count as distance metric
 
* Implemented with standard distance tracking and path reconstruction
 
 
===A* Algorithm===
 
* Enhanced pathfinding with heuristic function
 
* Uses geographical distance as heuristic
 
* Maintains f-score, g-score, and h-score for optimization
 
 
==Results Analysis==
 
 
The simulation tracks and visualizes several key metrics:
 
 
===Network Statistics===
 
* Total network capacity
 
* Average channel balance
 
* Number of transactions (total, successful, failed)
 
* Success rate percentage
 
 
===Visualizations===
 
* Transaction Statistics Plot
 
* Tracks successful vs failed transactions over time
 
 
* Channel Balance Distribution Plot
 
* Shows percentage of channels with extreme balances
 
* Monitors channels below 20% and above 80% capacity
 
 
* Success Rate Plot
 
* Displays transaction success rate over time
 
 
==User Interface==
 
 
 
The simulation interface provides interactive controls and real-time visualization of the network:
 
 
<center>[[File:lightning_network_interface.png|800px|Lightning Network Simulation Interface]]</center>
 
 
==Implementation Notes==
 
* Written in NetLogo 6.4.0
 
* Uses both built-in NetLogo features and custom extensions
 
* Implements realistic payment channel mechanics
 
* Includes automatic rebalancing mechanisms
 
* Features interactive UI controls for parameter adjustment
 
 
==Future Improvements==
 
* Implementation of more sophisticated routing algorithms
 
* Addition of dynamic fee adjustment mechanisms
 
* Integration of more realistic network growth patterns
 
* Enhanced visualization of payment flows
 
* Implementation of channel opening/closing dynamics
 
 
==Conclusion==
 
This simulation successfully models the complex dynamics of a payment channel network, providing insights into:
 
* Network topology effects on payment success
 
* Impact of different routing strategies
 
* Channel capacity and balance management
 
* System scalability and performance characteristics
 
 
The model serves as a valuable tool for understanding the behavior and limitations of payment channel networks under various conditions and configurations.
 
 
==Sources==
 
* Poon, J., & Dryja, T. (2016). The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments.
 
* Sivaraman, V., et al. (2020). Routing cryptocurrency with the spider network. USENIX NSDI.
 
* Martinazzi, S., & Flori, A. (2020). The evolving topology of the Lightning Network. PLOS One.
 
* Béres, F., et al. (2019). A cryptoeconomic traffic analysis of Bitcoin's Lightning Network.
 
* Pickhardt, R., & Nowostawski, M. (2019). Imbalance measure and proactive channel rebalancing algorithm for the Lightning Network.
 
* Wilensky, U., & Rand, W. (2015). An introduction to agent-based modeling with NetLogo. MIT Press.
 

Latest revision as of 22:38, 3 January 2025