Here Come the Exchanges

Welcome to the December edition of the Lightning Lab, a newsletter filled with Lightning Network updates, community coverage, and, of course, memes!

2020 has been a year filled with many challenges, but in true bitcoin form, the Lightning community has kept growing and building. We wish everyone a happy new year and look forward to what’s in store for Lightning in 2021 and beyond. ⚡️

Lightning Pool Passes 21 BTC in Volume

It has been over a month since Lightning Pool’s public launch, and our new liquidity market has witnessed exciting growth. Over 21 BTC of channels have been traded thus far, reallocating liquidity on the network to where it’s most demanded.  

If you’re running a Lightning business, jump in today to buy Lightning liquidity or start earning a return on your bitcoin. Fully matured, Lightning Pool will host sophisticated financial markets that allow the Lightning Network to grow towards transporting billions of satoshis per day. Read on to learn more...

Automate All the Things!

We recently announced Autoloop, a new feature in Lightning Loop that allows Loop users to automatically balance liquidity, saving time and making using bitcoin on Lightning more efficient. In Lightning’s early days, node operators needed to manually manage their channels and liquidity, but we are working towards the end state of full channel and liquidity automation. This marks an important step in Lightning’s evolution towards that ideal end state. We’re just getting started. 💪

News & Updates

Lightning Ecosystem: Here Come the Exchanges

Kraken Exchange just announced their plan to launch a Lightning Network integration in 2021. In an interview with Coindesk, Pierre Rochard was quoted as saying, “The Lightning Network has matured to a level where it can be used by Kraken. It really comes back to what our users are asking for. They want instant and efficient payments.” Kraken will bring its 4M users and the world’s third largest spot BTC market to the Lightning Network. They join Bitfinex as the second major exchange to join the Lightning Network. More are on the way, stay tuned… 🍿 

River Financial has been extolling the benefits of Lightning for exchanges. As fees continue to rise, they believe customers will begin to prefer exchanges focused on the best bitcoin UX… and that means Lightning.

Bottlepay officially launched their Lightning payments app in the UK. They support spending bitcoin over Lightning directly from fiat currency holdings, tipping on social media platforms, and developer APIs for integrating Lightning into any payment flow. Lightning UX is improving worldwide, every day. 

Scarce.City held their first Lightning auction last week for the below “Relentless Optimism” piece. 19 bidders placed 53 bids totaling almost 7 BTC, with a winning bid of 1 BTC. After the dust settled, Scarce.City created a policy of distributing all unclaimed deposit refunds to the bitcoin non-profit or Core/BTCPay dev of the artist’s choosing. Bitcoiners supporting Bitcoiners!

In other news:

  • 📈 LN Markets announced LN Clear, a private network of payment channels for trading firms to trade and instantly clear OTC derivatives. Yet another datapoint showing the Lightning Network has matured into a stable value transfer network and new users are comfortable allocating large sums of capital to it. 🚀

  • 🎧 Sphinx.Chat has 10xed the number of podcasts accepting streaming payments over Lightning in the last month. Stephan Livera, Marty Bent, and many of your favorites are onboard. They also added the crucial playback speed controller for those that like to listen at 2x (not recommended for listening to our CTO “roasbeef”).

  • 🏖 Bitcoin Beach ,a bitcoin-only community in El Salvador, hosted a food festival with all payments powered by the Lightning Network. The eight hour event tallied over 2000 transactions, and everything was “shockingly smooth.”

  • 🤖 MyNode has added Lightning Pool capabilities in its most recent v0.2.19 release. The dream of being your own bank by running a Raspberry Pi in your house is almost here.

  • 🏞 River Financial released a Lightning-focused article on their River Learn platform. They teamed up with Zap to offer a flash 2% cashback deal on all Lightning deposits. Exchanges supporting nearly free and instant deposits and withdrawals is a trend to keep an eye on for 2021.

  • 🎁 Bitrefill also partnered with Zap to offer flash gift card specials of 20% cashback if paid with Strike and 10% cashback if paid with Lightning. Set up your Twitter alerts for these accounts if you’re looking to save on some last minute holiday shopping!

  • 🏧 Puzzle ITC published a blog post detailing their offline Lightning Point of Sale implementation. Requiring both sender and receiver nodes to be online for a payment to succeed has restricted some use cases for Lightning. If Puzzle’s pull request to the LN specification is approved, those restrictions will be a thing of the past.

  • ⚡️ Breez wrote an article detailing use cases on Lightning’s road to mass adoption. Retail payments, content monetization, p2p chat, gaming, and #LiFi are where they see the most promise. Highly recommend reading the article in full to find out why!

  • 🌩 Fulgur Ventures released an overview of the Lightning Network ecosystem, detailing 322 projects across eight categories growing at a very healthy rate. Infrastructure Software and #LiFi are the largest categories, with gaming and payments trailing closely behind.

Lightning: A Transportation Network for Bitcoin

In today’s day and age, transportation networks for commodities are very well-understood phenomena. They are mission-critical pieces of infrastructure that operate silently in the background. Nearly every person in the modern world depends on multiple transportation networks every day. Familiar examples include:

  1. Railways for grain and corn

  2. Pipelines for oil and natural gas

  3. Electrical grids for electricity

  4. Fiber networks for data

The Lightning Network is a transportation network for bitcoin, the first digital commodity. 

Unlike the Lightning Network, these legacy examples are all paired with sophisticated financial markets that direct the allocation of resources within their network by letting producers and infrastructure owners hedge their risk. In every case, these markets lead to massive network growth and hugely increased demand for the underlying commodity as its availability increased.

  1. Physical commodities started trading on the Chicago Board of Trade (CBOT) in 1848, right before railways expanded from a mere 9,000 miles of coverage to 140,000 miles

  2. Natural gas futures have grown to be the third-largest physical commodity futures contract in the world by volume as the commodity’s transportation network has grown to >3M miles of pipeline. 

  3. Electrical markets like those operated by the Electric Reliability Council of Texas (ERCOT) and the Pennsylvania-New Jersey-Maryland (PJM) Interconnection direct hundreds of billions of kWh of energy per year across their millions of miles of power lines. 

  4. Internet exchanges like the Equinix Exchange trade bandwidth contracts worth billions of Tbit/s per year across millions of miles of fiber lines.

Lightning Pool will host sophisticated financial markets that allow the Lightning Network to grow to millions of nodes transporting billions of satoshis per day. Pool introduces the first pricing signals into the network communicating where liquidity is most demanded. These signals will help node operators decide where and when to open channels just like how pricing signals provided by electrical markets help grid operators identify where and when to build new transformers. More certainty for node operators will mean more efficient and sustainable operations.

Pool also creates a new source of revenue for routing node operators, who previously relied on routing fees alone. This improved incentive to run a routing node should make for a more distributed and reliable Lightning Network. A more distributed and reliable Lightning Network should improve the ability for entrepreneurs focused on micro-earning, micropayments, and #LiFi (plus others detailed in September’s newsletter!) to better serve their customers. A better customer experience on Lightning will bring more flows to the network, improve earnings for routing nodes, and build into a virtuous cycle of growth.

A fully mature Lightning Network will allow anybody with a smartphone to participate in global commerce friction-free, like Breez user J Rupee in Hyderabad. We have been rapidly moving that direction, and building up a two-sided financial marketplace directing capital allocation is the tried and true method to accelerate the growth of a transportation network. 

Lightning Labs News and Media

We are hiring for a designer! Know somebody skilled in UX and visual design that wants to make Lightning accessible to the world while working from anywhere? Send them our way.

We also have job postings up for a Lightning Infrastructure Engineer and a Business and Finance Operations role. Join us and take the leap to work in bitcoin! 🧙‍♂️

In the media, Laolu Osuntokun discussed the second layer at LaBitConf 2020, and Learning to Swim in the Lightning Pool on the Blockchannel podcast.

Desiree Dickerson spoke about Lightning and Gaming with MintGox on the Bitcoin Magazine Podcast, and about Lightning with Lolli on the Swan Bitcoin podcast.

Want to get involved? Join the LND Developer Community on Slack.

Meams

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