A Complex Systems Analysis of the Lightning Network for Resilience and Revenue Optimization

This thesis examines the Lightning Network, the most successful scalability protocol for the Bitcoin blockchain. By leveraging payment channels and a graph-based structure, the network enables a large number of off-chain payments with reduced latency and limited costs. The study investigates the topology of the Lightning Network as a complex system using real-world network graph snapshots, evaluating its structural properties, robustness, and resilience against various attack and failure scenarios. Experiments demonstrate that a broader distribution of payment channels, counteracting the network's inherent tendency toward centralization for efficiency, significantly enhances resilience, even in the event of failures among highly influential nodes. Furthermore, the thesis addresses the critical challenge of channel rebalancing, essential for optimizing network efficiency and overall transaction throughput. To this end, the main rebalancing strategies are described and compared, both theoretically and through simulations. The analysis includes proactive and passive techniques, considers the interaction between on-chain and off-chain operations, and evaluates the effectiveness of the methods also in relation to the economic costs associated with rebalancing. In addition, it investigates the impact of cooperative approaches among adjacent nodes in the rebalancing process.