Don't hold your breath for Lightning Network, DDOS issue is not yet solved and there are huge issues with proposed solutions to it!
DDOS is a huge issue to second layer Lightning Network solution. When Elizabeth Stark was asked how to solve this, she gave the following answer: "That's why we have outsourcing/watchtowers and suggest a longer timeout period."
That would be fine, but there are significant problems with this.
Outsourcing to watchtower services and/or sacrifice timely liquidity. You can't have trustless and instant.
Let us take the first example because it is the more ludicrous. We are supposed to escape on-chain fees by paying a watchdog service a fee? That doesn't quite make sense, and creates a market that favors rent-seeking behavior over consumer security. If you need a watchdog service, no matter what you pay them, your channel partner will be able to pay them to temporarily look the other direction. Users no longer are trusting Bitcoin, they're trusting a third party.
The second is more interesting to me because it affects the economic incentives of Bitcoin use. Funds locked in a channel can only be used across LN with the approval of both channel participants (fraud attempts notwithstanding). If, for some reason, the channel partner silently cuts you off, channel closure fees will be paid on it, and those funds will no longer be accessible for use for a period of time. There is still a risk involved in trusting LN itself - the risk of having funds become illiquid - and the more you secure yourself against the risk of fraud by extending this time, the longer your funds become illiquid. In other words, a highly-connected and well-funded channel operator will have arbitrary control of the liquidity of funds passing through it proportional to the amount of time required to redeem those funds. Setting aside a fraud attempt - assume he cannot steal the funds - he can still prevent them from being spent for a known amount of time by simply refusing to sign for them.
So, taking all of this into account, any better solutions for this problem?
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