Rene Pickhardt recently started a discussion on the differences between two-party and multiparty payment channels in relation to his research on payment reliability within the Lightning Network. He expressed doubts about the feasibility of focusing on multiparty channels for development.
The main advantage of channel factories in improving payment reliability lies in liquidity allocation. In a network with only two-party channels, users have to make decisions on where to allocate their liquidity, leading to potential failures if liquidity is not distributed efficiently. Multiparty channels allow users to allocate liquidity into larger groups and sub-allocate it off-chain as needed, offering more flexibility and reducing the risk of payment failures.
Multiparty channels operate by stacking conventional two-party channels on top of a multiparty channel, enabling off-chain modifications and transactions. However, the concern raised by Rene is the cost of transitioning to on-chain transactions when participants do not cooperate.
While the on-chain footprint is a significant factor to consider, the primary goal of off-chain systems is to incentivize participants to avoid on-chain transactions. Properly structuring multiparty channels can create subgroups with high reliability and trust, allowing for liquidity reorganization within the subgroup even if external participants are unresponsive or offline temporarily.
The focus should not solely be on the on-chain costs but rather on the core design principle of encouraging off-chain cooperation and minimizing the need for on-chain enforcement. It is essential to consider this fundamental aspect when envisioning the future of these systems.