With hierarchical pipelines, Lightning can overcome its scalability limitations by enabling fast and flexible pipeline resizing off-chain.
Developers are exploring the use of hierarchical pipelines to help speed up and make the Lightning Network (LN) more scalable. hierarchical channels enable flexible resizing of off-chain channels, enabling fast and inexpensive resizing, without on-chain transactions that add delay and cost. Conversely, resizing on-chain channels can cause delays of several months and increase fees. Current proposals for off-chain channel sizing involve creating a channel factory or CoinPool and swapping capacity between channels within the same factory or pool. Hierarchical channels allow for flexible resizing of off-chain channels without requiring capacity sharing within a limited group of users. Hierarchical channels allow the creation of a two-party channel with two main outputs, one per party, plus zero or more time-locked contract (HTLC) outputs.
Each output from a hierarchical channel funds another channel which can be viewed as the root of an off-chain output tree where leaves are owned by individual users. Parties can use a hash time lock contract (HTLC) to exchange bitcoins, linking their HTLC to HTLC in other (potentially hierarchical) channels, thus making payments via LN.
With hierarchical channels, the developers propose to solve two problems. First, it allows for flexible, near-instantaneous, off-chain resizing, which is similar to the Lightning Network’s goal of enabling near-instantaneous off-chain payments. Second, hierarchical channels could be used by casual users who can send and receive bitcoins without the need for watchtowers, while dedicated users can use the full capacity of their channel to route payments, even when the casual user is idle. . Hierarchical channels would allow casual users to operate in a watchtower-free manner without stranding any capital.
Implementing hierarchical channels could help overcome one of the biggest limitations of the Lightning Network, which is its scalability. Hierarchical channels are expected to provide the necessary support for efficient Lightning Network payments without introducing additional delays, adding costs, and limiting scalability. The development of hierarchical channels does not require any changes to the underlying Bitcoin protocol.
The developers propose hierarchical channels to be an effective way to allow flexible, off-chain resizing of channels within the Lightning Network. The ability to quickly and efficiently resize channels will allow the Lightning Network to continue to scale and meet the growing demand for more efficient payment channels.
