DatschaBlitz asked 27 days ago

What would be a fair value for routing fees?

E.g. 100 ppm? I started all channels with the default value of 1 ppm but I would like to some reasonable value, if the change is possible in existing channels.

1 Comment

LN+

LN+ Admin wrote 25 days ago

The two components that make up routing fees are the base fee and the variable fee.

Base Fee
The base fee is a fixed amount of satoshis (or millisatoshis) that is charged for every transaction that is routed through a node, regardless of the transaction size. This fee is set by the node operator and is designed to cover the basic costs associated with forwarding transactions, such as computational and bandwidth costs. The base fee is typically very small, often set to a minimal amount to remain competitive while still providing a disincentive against spamming the network with microtransactions. Many nodes run on Zero Base Fee to encourage a type of transaction that consolidates lots of smaller channels into a large single transaction.

Reasonable: 0 or 1 sat.

Variable Fee (Fee Rate)
The variable fee, or fee rate, is a charge that depends on the amount of the transaction being routed. It is expressed as a percentage of the transaction amount (ppm). This fee is designed to compensate node operators for providing liquidity and taking on the risk of locking their funds in payment channels. The larger the transaction, the higher the variable fee in absolute terms (satoshis), incentivizing nodes to route larger payments. The variable fee rate is set by each node operator based on their preferences, the current demand for routing transactions, and their competitive positioning within the network.

Reasonable: 100 to 3,000 ppm. The rate depends on how much in demand the channel capacity is.

The total routing fee for a transaction is calculated by adding the base fee to the product of the transaction amount and the variable fee rate.

Please login to post comments.