Strategy Glossary

Key terminology for protocol strategy, decision-making, and multi-protocol operations.

A

Atomicity Property where an operation either completes entirely or has no effect. Critical for multi-protocol workflows where partial completion could cause issues.

Availability The ability of a protocol or service to accept and process operations. Measured as uptime percentage or mean time between failures.

B

Backpressure Mechanism to slow down operations when downstream capacity is exceeded. Used in payment routing and relay publishing.

Batch Processing Combining multiple operations into a single transaction to reduce per-operation costs. Common in Bitcoin for UTXO consolidation.

Break-even Point The volume or amount threshold where switching protocols becomes cost-effective.

C

Capacity Maximum throughput or value that can flow through a channel, protocol, or system. Lightning channels have fixed capacity.

Channel Liquidity The distribution of funds within a Lightning channel. Local balance is outbound liquidity; remote balance is inbound.

Compensating Transaction A transaction that reverses the effects of a previous operation. Used in saga patterns for multi-protocol rollback.

Confirmation Inclusion of a transaction in a block (Bitcoin) or acknowledgment by relays (Nostr). More confirmations = higher finality.

Congestion State where demand exceeds capacity, leading to delays or increased costs. Bitcoin mempool congestion raises fees.

D

Decision Tree Structured algorithm for selecting actions based on conditions. Used to choose protocols based on requirements.

Degradation Reduced but still functional operation. A protocol might degrade gracefully when some components fail.

Destination The intended recipient of a payment or message. Format determines protocol: bc1... (Bitcoin), lnbc... (Lightning), npub... (Nostr).

E

Exponential Backoff Retry strategy where delay doubles after each failure. Prevents overwhelming recovering services.

F

Fallback Alternative protocol or method used when primary fails. Bitcoin is the typical fallback for failed Lightning payments.

Fee Optimization Strategies to minimize transaction costs. Includes timing, batching, and protocol selection.

Finality The point at which a transaction is irreversible. Bitcoin: probabilistic (6 conf ≈ final). Lightning: immediate but conditional.

G

Graceful Degradation Maintaining partial functionality when components fail. An agent continues Bitcoin operations if Lightning is unavailable.

H

Health Check Periodic verification that a protocol or service is operational. Returns status indicators.

Hot Wallet Wallet with keys accessible for automatic signing. Required for Lightning, optional for Bitcoin.

HTLC (Hash Time-Locked Contract) Smart contract enabling conditional payments. Core mechanism for Lightning payments.

I

Idempotent Operation that produces the same result regardless of how many times it’s executed. Essential for safe retries.

Inbound Liquidity Capacity to receive Lightning payments. Remote balance in channels.

L

Latency Time delay between initiating and completing an operation. Bitcoin: minutes. Lightning: milliseconds. Nostr: milliseconds.

Liquidity Availability of funds for transactions. In Lightning, refers to channel balance distribution.

M

Metrics Quantitative measurements of system behavior. Used for monitoring and alerting.

Mitigation Actions taken to reduce identified risks. Examples: using watchtowers, distributing across relays.

Multi-Path Payment (MPP) Splitting a Lightning payment across multiple routes. Enables larger payments and improves success rates.

Multi-Protocol Operations involving more than one protocol. Example: Lightning payment with Nostr notification.

O

Observability The ability to understand system state from external outputs. Combines metrics, logs, and traces.

Operational Cost Ongoing expenses for running infrastructure. Includes nodes, channels, relay subscriptions.

Opportunity Cost Value forgone by locking funds. Lightning channel capital has opportunity cost.

Outbound Liquidity Capacity to send Lightning payments. Local balance in channels.

P

Protocol Router Component that selects appropriate protocol for each operation based on requirements.

Protocol Selection Process of choosing Bitcoin, Lightning, or Nostr for a specific operation.

R

Rebalancing Moving liquidity between Lightning channels to restore outbound/inbound balance.

Recovery Restoring normal operation after failure. May involve saga compensation or manual intervention.

Redundancy Multiple independent paths for the same operation. Using multiple relays provides redundancy.

Retry Repeating a failed operation. Should be idempotent and use exponential backoff.

Risk Matrix Grid showing risks by likelihood and impact. Used for prioritizing mitigation efforts.

Risk Tolerance Level of risk acceptable for operations. Determines thresholds for proceeding vs. aborting.

Routing Finding a path through the Lightning network for a payment. Multiple hops may be required.

S

Saga Pattern Workflow pattern using compensating transactions for rollback. Handles non-atomic multi-protocol operations.

Settlement Final transfer of value. Bitcoin provides ultimate settlement; Lightning settles via channel close.

Split Payment Dividing a payment into smaller parts. Used when single-path capacity is insufficient.

Submarine Swap Exchange between on-chain Bitcoin and Lightning. Enables cross-layer operations.

T

Threshold Value that triggers action when exceeded. Used in alerting and decision trees.

Throughput Volume of operations per unit time. Lightning has higher throughput than Bitcoin.

Timing Choosing when to execute operations. Bitcoin fees vary by time; Lightning routing varies by congestion.

Total Cost of Ownership (TCO) Complete cost including transaction fees, infrastructure, and opportunity costs.

Trade-off Compromise between competing objectives. Speed vs. security is a common trade-off.

Two-Phase Commit Protocol ensuring all participants agree before finalizing. Used for cross-protocol consistency.

U

Uptime Percentage of time a service is available. Lightning nodes need high uptime for channels.

W

Watchtower Service that monitors channels and broadcasts penalty transactions if counterparty cheats.

Workflow Sequence of operations across potentially multiple protocols. May require orchestration.

Machine-Readable Summary

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