I think the problem is that large LSPs actually have some control over funds as they can close more channels on old states than can actually punish them for doing so (What's the term for this attack?). If there was no way of stealing users' money, reputation would be less of an issue and the stability over TOR ... I'm sure we can fix this. How about TOR nodes that take e-cash for routing? TOR only adds few hops to the route so it shouldn't make LN payments impossible unless the network is saturated which paying for the service should be able to solve.

I had the same gut reaction. It may at least be possible, if extremely difficult, to get past the need for good repute ... LN penalty not ideal here, clearly.

The attack you describe was called "forced expiration spam" in the original LN paper. I usually call it an "expiration flood". Other people have other names for it. See

Bitcoin Optech

Expiration floods

Expiration floods occur when many timelock-contingent payments need to be settled onchain within a limited period of time. If not all of the settle...