Dynamic management of Lightning channel capacity is required to support efficient Lightning Network (LN) payments.
– On-chain resizing introduces delays, adds costs and limits scalability.
– Fast and cheap resizing may be required to support watchtower-free LN payments for casual users.
– Channel factories allow off-chain channel resizing, but only by exchanging capacity within a single factory.Hierarchical channels allow flexible, off-chain resizing of channels.
– They don’t require an exchange of capacity within a limited pool of users.
– They also support watchtower-free casual users without stranding any channel capacity.Hierarchical channels do for channel capacity what the LN does for bitcoin.No change to the underlying Bitcoin protocol is required.
