Routing node

Somebody has to sit in the middle. Routing nodes are the paid volunteers of the Lightning graph: they lock up capital, stay online, and earn a base fee plus a proportional rate on each forward. Anyone can run one, very few make meaningful money at it, and the network depends on them anyway.

How it works

A routing node advertises its channels and its prices, then forwards payments that other nodes decide to send through it.

Announcement comes first. A public channel is gossiped in a channel_announcement that carries four signatures: one from each node's identity key and one from each of the keys controlling the funding output. That is what proves the channel is real and not a claim, because the funding output is visible on chain and the signatures tie it to the two nodes. A separate node_announcement carries the operator's alias, color and network addresses.

Prices are advertised in channel_update, and there are two of them per hop. The fee for forwarding is fee_base_msat plus the amount multiplied by fee_proportional_millionths divided by 1,000,000. A hop charging a 1 satoshi base and 200 parts per million takes 21 satoshis to forward 100,000 satoshis: 1 satoshi flat plus 20 satoshis proportional. The same message carries the cltv_expiry_delta, the number of blocks of timelock the node insists on keeping between the payment it receives and the payment it sends, and htlc_minimum_msat, the smallest forward it will bother with.

Forwarding itself is mechanical. An onion packet arrives, the node peels its own layer, learns only the next hop and the amount, and offers a matching hash time locked contract on the outgoing channel. If the route completes, the preimage travels back and the node keeps the difference. If it does not, everything expires and unwinds. Nothing the node does is trusted: it cannot see the sender, the recipient, or the route length, and it cannot take the money without producing the preimage.

The limits are physical. No more than 483 pending forwards per side of a channel, because each one adds an output to the transaction that would enforce the channel on chain. And every satoshi committed to a channel is a satoshi not doing anything else, which is the real cost of the business.

Where you see it

Routing nodes are invisible in normal use and unavoidable in the economics.

When a wallet quotes a fee before you send, it is summing the advertised fees of every hop it plans to use. That is why the same payment can cost 2 satoshis today and 40 tomorrow: the route changed. Large public nodes run by exchanges and payment processors carry most of the volume, and directories such as public Lightning explorers rank them by total capacity, which measures capital committed rather than reliability.

If you are considering running one, do the arithmetic before the shopping. Fee income is a fraction of a percent of the value you forward, so a node with 0.5 BTC deployed that forwards a few million satoshis a month earns thousands of satoshis, against the on-chain cost of opening and closing channels and the risk of a force close at a bad fee rate. Most operators run one because they want the network to exist, not because it beats cold storage.

Routing node vs a bitcoin node

A routing node is a Lightning node that forwards for others; a node in the plain bitcoin sense validates blocks and relays transactions. They run different software, speak different protocols and answer different questions. A bitcoin full node tells you whether a transaction is valid according to consensus rules and keeps nobody's money but yours. A routing node holds funds in live channels, must be online to be useful, and earns fees. Most routing node operators run both, because a Lightning node needs a trusted view of the chain, but the two jobs are separate and only one of them puts your coins in a hot wallet.