Level: Bachelor 
Responsible person: Dr. Jian Hong Lin
Keywords: Bitcoin Lightning Network, Critical Nodes, Centrality Measures, Network Analysis, Cryptocurrency, Node Influence, Network Resilience 

The Bitcoin Lightning Network (BLN) [1] offers a revolutionary solution to the scalability challenges faced by the Bitcoin network, enabling rapid and cost-effective transactions through off-chain payment channels. While much of the existing research has concentrated on the structural analysis of the BLN [2-3], there is still a significant gap in understanding how key nodes influence transaction dynamics within the network. This project seeks to address this gap by modeling transactions within the BLN to examine the interplay between node interactions and payment flows. Building on this model, the project will introduce a novel centrality measure that captures both the temporal and structural characteristics of the BLN, allowing us to identify the most influential nodes. Through comprehensive scenario-based evaluations, the project will assess how these critical nodes impact the network's performance and resilience. The findings from this study could inform strategies to mitigate centralization risks and enhance the decentralized nature of the BLN, ultimately optimizing its efficiency and security. 

Project Goals: 

This project is designed to identify and analyze critical nodes within the Bitcoin Lightning Network (BLN) with the following key objectives: 

1. Literature Review: 
   The student will perform a comprehensive review of existing research on the Bitcoin Lightning Network, with a focus on node centrality and network resilience. The review should highlight key findings and identify gaps that this project aims to fill. 

2. Modeling Transactions: 
   The student will develop a model to simulate transactions within the BLN, taking into account both temporal and structural characteristics of the network. This model will serve as the basis for understanding how node interactions influence payment flows and overall network dynamics. 

3. Centrality Measure Development: 
   The student will propose a novel centrality measure tailored to the unique features of the BLN. This measure will be employed to identify the most influential nodes within the network. 

4. Evaluation and Analysis: 
   The student will carry out a series of evaluations across different scenarios to assess how the identified critical nodes affect the BLN’s performance and resilience. The student will analyze and interpret the results, offering insights into potential centralization risks and proposing strategies to promote network decentralization. 

5. Final Report and Presentation: 
   The student will compile the research findings into a final report, detailing the research process, methodologies, results, and conclusions. Additionally, the student will prepare a presentation to showcase the key outcomes of the project. 

Student Learning Outcomes: 

• Develop a deep understanding of the Bitcoin Lightning Network and its operational mechanics. 

• Acquire skills in network modeling and analysis, particularly within the context of cryptocurrencies. 

• Learn how to design and implement centrality measures that are specifically adapted to unique network characteristics. 

• Enhance the ability to conduct comprehensive research, critically evaluate outcomes, and effectively present findings. 

References: 

1. Poon, J., & Dryja, T. (2016). The bitcoin lightning network: Scalable off-chain instant payments. 

2. Lin, J. H., Primicerio, K., Squartini, T., Decker, C., & Tessone, C. J. (2020). Lightning network: a second path towards centralisation of the bitcoin economy. New Journal of Physics, 22(8), 083022. 

3. Lin, J. H., Marchese, E., Tessone, C. J., & Squartini, T. (2022). The weighted bitcoin lightning network. Chaos, Solitons & Fractals, 164, 112620.