ProfitPilot: Enabling Rebalancing in Payment Channel Networks Through Profitable Cycle Creation

Payment Channel Networks (PCNs) have successfully replaced slow global consensus mechanisms with local cryptographic agreements between nodes. As PCN payments heavily depend on network topology for payment routing, strategic node positioning is critical to building cost-effective channels for users and enhancing network robustness against topological attacks. Nevertheless, existing node attachment strategies in the Lightning Network (LN), the most popular PCN, ignore crucial topology issues, such as network centralization and the scarcity of cycles for cheap off-chain rebalancing. In this paper, we first investigate the current state of the LN topology and show that the availability of topology cycles is highly unequal in the network, which exposes the network to several vulnerabilities. Then, we design ProfitPilot, a node positioning strategy that encourages cycle creation in PCNs to reverse the trend in centralization and enable cheap off-chain rebalancing. We compare our proposed algorithm with heuristics available in the Lightning Network and verify that even by focusing on creating cycles, ProfitPilot successfully increases the user’s probability of collecting fees by over 2× while reducing average paying fees. Furthermore, out of all the evaluated heuristics, ProfitPilot presents the fastest increase in network transitivity and mitigates the impact of targeted topological attacks by over 17% compared with the regular Lightning Network operation.