Bitcoin's second-layer scaling solution, the Lightning Network, has added a new feature, called Autoloop, that allows for improved payment channels between merchants by making transactions more efficient.
In a note Recently published, the network development team Lightning Network (LN), announced the launch of a new feature called Autoloop, intended to automatically improve transactions made by users of LN's Loop service. According to its developers, Autoloop allows Loop users to "automatically balance liquidity", saving time and making the use of Bitcoin in Lightning more efficient.
The goal of LN with this feature is to maintain and ensure the balance of payment channels within the network, automating liquidity and allowing users to configure and set their parameters without having to intervene manually, which also contributes to saving time and simplifying this service.
For its part, Lightning Labs, the company behind the development of the LN network, points out that users who wish to use this service only have to establish the percentage of input or output capacity required by each of their channels, specify their budget limitations on commission rates and let the client, i.e. the software, take care of the rest. In this way, users only have to establish a single configuration with the parameters they want and the Autoloop function will be in charge of evaluating the balances periodically, every 10 minutes, to ensure that they are met; and if not, it will automatically make adjustments to meet the needs established by the users.
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How Does It Work?
In order for Loop users to clearly see how Autoloop works, Carla Kirk-Cohen, a member of the Lightning Network development team and author of the document, explained an example of a channel to process up to 200.000 satoshis, where the output was set to 190.000 satoshis, 95% of the total to be processed, and the input to 10.000, 5% of the total to be processed within the channel.
Kirk-Cohen explains that to maintain a minimum of 40% of the total channel capacity as input capacity, and a minimum of 20% as output capacity, then the following configuration should be established:
Source: Lightning Labs
The configuration will allow the software to establish a mid-balance point that it will maintain constantly, to ensure that the parameters required by the user are met at all times.
“Autoloop will aim for a midpoint between the minimum incoming and outgoing thresholds, and a Loop Out will automatically be initiated to rebalance the channel. It’s as simple as that.”
Source: Lightning Labs
Improving payment channels in LN
Payment channels are what power the LN decentralized network, which was designed to enable micropayments with bitcoins to be made atomically and instantly, integrating very low transaction fees and without the need for trusted third parties or custody.
In LN, payment channels allow transactions to be carried out off-chain, without the risk of immaterial commissions and without custody, where the parties involved in the transaction are the ones who issue payment commitments signed by each other to avoid the need to wait for confirmations on the network, as happens in the blockchain Bitcoin's original. But, although this innovation significantly improves the scalability of Bitcoin, and allows transactions of up to 1 Satoshi (0,00000001 BTC), has a limitation: users must open and close channels to make different transactions.
Therefore, the integration of Autoloop into LN simplifies the use of this network, since this function allows channels to be kept balanced, automatically injecting liquidity into those that need it to keep them open, allowing users to save time and simplify their functions. Likewise, users can establish the commission budget, maintaining a limit on the rates that also help keep the channel balanced.
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