How do you earn Bitcoin with the Lightning Network?

[Abiky]

I've seen that it's possible to earn Bitcoin by establishing a "Routing Node" for the Lightning Network. Now, I'm not very familiar on setting up a LN node to support Bitcoin's Layer-2 scalable solution, but I would love to get some guidance on how to become a routing node. One of the things I'm mostly interested to know, is the estimated earnings you'll get by doing this. Even if I won't make a lot of money running a routing node for the LN, it'll prove to be a nice source of passive income.

Has anyone tried doing this before? How easy it is to become a routing node? Do I have to be fully synced with the BTC blockchain to get started? Any recommendations or suggestions will be greatly appreciated. Thanks in advance.

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[LoyceMobile]

From what I've read, it's unlikely to earn from running a LN node. Your earnings might very well be less than the cost of opening channels.

[BitMaxz]

Has anyone tried doing this before? How easy it is to become a routing node? Do I have to be fully synced with the BTC blockchain to get started? Any recommendations or suggestions will be greatly appreciated. Thanks in advance.

I don't think if you can earn from routing fees because the fees you will earn are not stable it depends on the network how much you can earn in milisat.

I never tried this yet but I am planning to start a lightning node and trying to earn even cents from my lightning network in the future just to learn and know how routing fees work.

I don't know how easy to route the lightning node and earn but there are many videos explaining what is routing fees.
Check this video https://www.youtube.com/watch?v=L39IvFqTZk8

I think you should be fully synced to be able to use the lightning network.


Check these videos below how to set up a lightning node in raspberry pi.

- Lightning Node Part 1
- Lightning Node Part 2
- Lightning Node Part 3
- Lightning Node Part 4
- Lightning Node Part 5

Or check this on github with lots of information and guide how to install the raspiblitz
Source: https://github.com/rootzoll/raspiblitz

[Abiky]

From what I've read, it's unlikely to earn from running a LN node. Your earnings might very well be less than the cost of opening channels.

Thanks for the tip. I'm really into this even if I don't manage to make a decent income out of it. This would definitely work as a sort of passive income that could go well with my earnings from PoS coins. Still though, this wouldn't be the ideal profit solution for the average person as most people nowadays are looking to make a quick buck out of crypto.

I've heard that it's somewhat complicated to set up a routing node for the LN, but a step-by-step guide for this would make things easier especially for non-tech savvy people in the mainstream world. Without adoption for the Lightning Network, I don't see any reason why anyone should run a routing node in the first place.

I don't think if you can earn from routing fees because the fees you will earn are not stable it depends on the network how much you can earn in milisat.

I never tried this yet but I am planning to start a lightning node and trying to earn even cents from my lightning network in the future just to learn and know how routing fees work.

I don't know how easy to route the lightning node and earn but there are many videos explaining what is routing fees.
...

I think you should be fully synced to be able to use the lightning network.

I'm aware that earnings are too small for anyone to get a ROI running their own nodes for the LN. Still though, it'll be a fun (and educational) task that would accumulate "pennies" over time just by doing nothing (almost). If everyone starts using the Lightning Network in mass, there could be a possibility that routing node operators could earn more money than usual. Adoption is key for the Lightning Network to succeed as a micropayments solution for the Bitcoin blockchain.

By the way, thanks for the videos. I'll take a good look on them to get a proper understanding of how routing nodes work on the LN. I'm planning on doing this with a Raspberry Pi 4 that's loaded with 4GB RAM for maximum performance. Since the BTC blockchain is big, the only solution to get fully synced would be to use an external HDD connected to the Pi. A VPS could work too, but I'm not going to use it for a LN routing node as the earnings made won't compensate for the monthly expenses of the remote server. In my case, I pay little to no electricity with the Raspberry Pi setup on my friend's place.

Any other tips, recommendations or suggestions will be highly appreciated.

[singlecivilization]

You will not earn much. A friend operates a large channel and routes many transactions but he still earns less then €5 monthly from it

[franky1]

first you have to unerstand the concept of LN

imagine A wants to pay E 20 msat
starting at
A[100:100]B[100:100]C[100:100]D[100:100]E
then
A[80:120]B[100:100]C[100:100]D[100:100]E
A[80:120]B[80:120]C[100:100]D[100:100]E
A[80:120]B[80:120]C[80:120]D[100:100]E
A[80:120]B[80:120]C[80:120]D[80:120]E

as you can see. by the end E has 20 more than A
the thing is each route hopper in between gets affected aswell.
for instance if C wanted to then pay D 80
starting at
A[80:120]B[80:120]C[80:120]D[80:120]E
then
A[80:120]B[80:120]C[0:200]D[80:120]E
guess what happens.
A cannot pay D or E anything because C route is now empty
B cannot pay D or E anything because C route is now empty

so those wanting to be an effective and active 'router' need to have funded channels with more msats available then al preceding hops to allow those hops
in other words for C to be an effective route for A,C and still have funds for own spending. C needs to have 300 upfront

another way to present it
if you only have enough funds to buy 30 coffees but you tell people they can use you as a payment gateway. 30 people will drink up your reserves meaning you then cant even buy yourself coffee when everyone else has had theirs.

.
the next thing to consider is that in the example of A-E that is 4 hops to get to destination (3 third party) so imagine having to pay each party 1msat
a 20msat tx costs 3extra msat. but each party only gets 1 msat
yep youll only get 1 msat for being a route in the example above

foolish people have tried to set up chains of routes .. EG imagine node B and D was the same user with more channels. yes he gets paid twice when A wants to pay E
but if you do the math. you end up needing alot of msat to cover the transaction but the reward is only a partial fee of what the sender is sending. the more channel chains you set up. the more reserves you need
you end up depleting your reserves before even making a couple cents worth of income
then you end up having to close channels and reopen channels to re-aggregate funds to start again. costing you more then a few cents in onchain fee's

or you could do the most foolish thing of depositing funds to watchtowers/factories to be our custodian so that they can supply you with endless offchain aggregated open/close sessions. but then you are ofcourse no longer really holding bitcoin in any sense of the term. your just a offchain network user playing with msats while letting the custodian having the onchain signing power(in other words they own the coins)

[figmentofmyass]

You will not earn much. A friend operates a large channel and routes many transactions but he still earns less then €5 monthly from it

the flip side: that's a monument to how cheap it is to use lightning! we're talking 1 satoshi base fees and 0.000001 satoshi median fee rates. https://1ml.com/statistics

it'll be interesting to see when the tipping point for LN adoption will be. the super low fees are a huge incentive to use it, but the network is still too small and illiquid to warrant large scale adoption.