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How Lightning Powers the Global AI Economy ... Where the Machines Pay You⚡🤖🌎
Welcome to the latest edition of the Lightning Lab 🧪, a newsletter filled with Lightning Network updates, community coverage, and, of course, memes! In this issue, we highlight the recent AI4All hackathon from Fedi and Stakwork, do a deep dive into why the intersection of AI agents and Lightning payments is so compelling for developers, and discuss a host of exciting ecosystem updates!
How Developers Are Building AI for All with L402 🤖
Last month, we released a new set of developer tools to enable the Lightning and AI developer communities to build global, cost effective LLM (Large Language Model) tooling which seamlessly incorporates Lightning and bitcoin. This release is built on the L402 protocol, a protocol that enables APIs to use Lightning payments for authentication, and Langchain, a popular library to simplify working with AI agents by adding external data to allow for more advanced functionality. The community was extremely excited about the developments, with outlets like Bitcoin Magazine, Coindesk and The Block covering the announcement.
To see these technologies in action, check out our recent developer tutorial video on Youtube!
The timing of this release couldn't have been more perfect with the start of the AI4All hackathon organized by Fedi, Stakwork, Bolt.Fun, and Replit, so we were excited to see what the Lightning developer community would build. In short: they absolutely blew us away! The community produced 44 total projects, 29 involving Lightning payments directly, 12 projects leveraging the new L402 standard, and an exceptionally high level of quality across the board.
The hackathon’s "Overall Winner" was PhotoBolt from CJ Chua and Sebas Arriola. PhotoBolt uses AI image generation, nostr communications, and Lightning payments to allow users to pay to transform any generic product photo into a poster. Imagine taking a picture of your favorite summer scene, uploading it to a website, having a market of AI agents compete to win your business for each step of the process, and receiving a beautiful poster to hang on your walls paid for over LN. So cool!
Flow, from Alby co-founder Michael Bumann and engineer Adithya Vardhan, won the Agent track by providing the n8n community, which is building popular no-code workflow automation software, with L402-enabled access to ChatGPT. This means that anybody anywhere with an Alby wallet can “build radical new AI supported workflows without the need for accounts” and use “frictionless instant payments across various workflows and services.” We love the focus on expanding outside of the bitcoin community and helping non-technical end users seamlessly use Lightning in their day-to-day activities!
Netonomy won the Privacy Track by building “a portal to a decentralized future where people become servers and interact through open protocols.” They used a combination of the nostr protocol for messaging, the WebLN standard for enabling Lightning payments in the browser, Decentralized Identifiers (DIDs) for user identity, and Decentralized Web Nodes (DWNs) for storing user data to provide end users with a private way to browse the web, and then wrapped an OpenAI-based agent in an L402 paywall to let users access AI services while retaining their privacy through bitcoin payments.
On the Training Track, the Bitcoin-PAL team won first prize with a bitcoin-focused AI chatbot coupled with an incentivized crowd-sourcing platform to train LLMs with bitcoin. The chatbot itself is trained on an open-sourced library of documents, and the team built a novel Github Actions workflow to automatically pay users who successfully get documents merged into the library via their Lightning Address.
Finally, Bitdevs Upgraded won the Bitcoin Education Track by building a BitDevs meetup website generator with an AI-powered content summarizer. For the unfamiliar, BitDevs meetups are a global series of monthly bitcoin developer meetups in cities like Austin, San Francisco, New York City, Vancouver, São Paulo, San Juan, and more. Lowering the barrier to entry for new meetups to get started is a great initiative to help us on our mission of bringing bitcoin to billions!
The AI4All hackathon was an inspiring showcase of how bitcoin and Lightning can empower AI developers to build globally accessible applications with baked-in monetization. Read on for more on why that’s particularly exciting for the prospects of the AI revolution…
News & Updates
Binance has completed their integration with the Lightning Network with deposits/withdrawals now live on the platform. Binance's integration of the Lightning Network marks a significant step forward, given their immense global user base and widespread influence in the industry. 🚀🚀🚀
Primal, a new nostr client, released their beta app for iOS on Testflight and secured a $1M seed round from Ten31, Hivemind Ventures, and others. Exciting to see support for those exploring the Next Frontiers of Lightning!
River launched a brand new dashboard for their Lightning Services platform showing transactions in real time and a simple interface to receive Bitcoin. They also published a new report on business and consumer adoption of Bitcoin/LN payments, and released a new logo that drops “Financial” from the name.
Joltz shipped their “Bitcoin Rewards as a service” API, allowing any business to integrate bitcoin rewards into their app or website, delivered through the Lightning Network. They also announced they will be launching their Taproot Assets Wallet beta in a few weeks. The wallet will be able to mint tokens and collectibles, send/receive assets, and will have a Universe explorer.
🎉 The number of active nodes on the Lightning Network exceeded 18,000 for the first time, Number of People Go Up!
📈 Wallet of Satoshi crossed the 10M cumulative Lightning payments mark, with 50% of their total payments occurring in just the last 8 months.
🌊 Geyser’s creators raised 21 BTC since the platform started operating. Borderless fundraising for communities that want to change the world, made possible by Lightning!
🎧 The Value 4 Value ecosystem has been ramping up its numbers for the last few months, with podcasters stacking 10M sats ($2.5k)/week.
🎤 ElenPay shared the stats for Lightning payments at BTCPrague, where they were the official payment processor. They processed 4k transactions totaling 1.37 BTC ($41.1k) during the conference with a 98% payment success rate, which is much higher than credit cards! They also looped out 0.65 BTC ($19k) and had 99.99% uptime and 1.64 second backend latency.
📊 THNDR Games released some stats on their global distribution. 14.91% of their users are from the US, 11.03% from the Philippines, 9.25% from Brazil, and 5.74% from Argentina.
🏞 River has routed 2M Lightning transactions since they started their node.
👀 Coinbase is “looking into how to best add Lightning,” according to CEO Brian Armstrong, who mentioned Lightning favorably several times on Coinbase’s Q2 earnings call. Their Protocol Specialist Viktor Bunin wrote an article clearing up common misconceptions for those unfamiliar with Lightning’s advancements over the last several years. Looking forward to more news soon™…
💰 Alyse Killeen was a guest on Bloomberg and discussed how enterprises are adopting Lightning along with how the recent crackdown on crypto didn’t impact her investments in the Lightning space.
🖋️ Max Webster wrote an excellent article on the convergence of Lightning, nostr, and Open Source AI. The piece highlights the need to train federated, open models, enhance data quality, and enable AI agents for economic interactions. Bitcoin, the Lightning Network, and nostr are identified as critical infrastructures to achieve the goal.
🗞️ Mickey Koss published an article in Forbes on how companies like Ibex and Osmo are leveraging the Lightning Network to help people in Latin America send and receive money globally.
🔍 Human Rights Foundation announced several 2 BTC ($60k) bounties, including a human-readable BOLT 12 offer integration into a popular iOS or Android wallet, self-custodial mobile Lightning Address, and others. They also partnered with Voltage on an initiative to help dissidents and NGOs accept Bitcoin donations more quickly, easily, and safely by providing them with easy-to-maintain BTCPay Server instances, inbound and outbound liquidity for lightning donations, and troubleshooting and technical support.
🧠 River published an article looking ahead to the Lightning payments UX in 2025, highlighted advancements towards the "It Just Works experience” such as async payments for offline receive, splicing for a unified wallet balance, and static QR codes for a simpler payments experience.
💬 Ollie The Dev built a LangChain agent that can create, check and make payments using the Bitcoin Lightning Network. He also created Satoshi Agent, a new chatbot trained on all of Satoshi’s public statements using LangChain. The chat charges 10 sats using WebLN for each user interaction.
🎛️ Matador is an L402 passthrough for any arbitrary API, built by Kody Low. The first version is configured to support the OpenAI API, but the idea is anyone with an API Key for any type of service to act as an L402 passthrough to the actual API.
📖 Kody Low published a tutorial on how to get started building nostr AI Data Vending Machine clients and services using Replit. DVMs are a way of using nostr as a marketplace for compute, described by NIP 90 written by pablof7z.
📲 Primal, the nostr client, unveiled One-Tap Zaps, seamless Zaps using WebLN & Alby.
⚡ Zapple Pay is a workaround for zapping on Damus, which had to remove the functionality after Apple’s review. Using the Nostr Wallet Connect protocol, a zap is initiated when a nostr user reacts to a post with a Bolt emoji.
✅ Current, another nostr client, had the same issues with Apple and zaps, but got their app approved after adding an option for in-app purchases (IAP) of sats. So the app is now approved and available, with full support for zaps.
🖼 Royllo released their Taproot Assets Explorer, providing a web interface and an API to search and discover assets issued through tapd with ease. The developer excitement for multi-asset Lightning is palpable!
🔌 Voltage released Surge, their all-in-one monitor for Lightning node health and performance. With Surge, users can follow the performance of their nodes including metrics such as peer health, uptime, channel activity, and more. And Graham Krizek, their CEO, wrote an article on the trend of more companies including financial services in their products and how bitcoin via Lightning is the optimal solution.
⛈️ Zeus opened up Zeus v0.8.0 alpha builds to community supporters. The new version features a new embedded, in-app LND node, and a Lightning Service Provider, Olympus, for providing liquidity to users.
🎶 Wavlake published an article on how music has traditionally been limited on podcasts due to licensing costs. Through Open Music and Value for Value platforms like Wavlake, podcast hosts can feature music without permission or paywalls, while still compensating artists.
🎧 Adam Curry's recent Boostagrams Ball music-focused podcast is leveraging Open Music to enable artists like Ainsley Costello to earn 357,200 sats (~$104.11) in just two weeks.
👩💻 LN Capital released Torq v1.0, a node management tool for developers. The newest release implemented the open LSP spec for allowing users to buy channels from different LSPs, added HTLC firewalls for force closure prevention, included an easy interface to move funds between nodes, and introduced a paid version of Torq.
🐝 Alby released the Alby Browser Extension v3, which includes among other things the introduction of a Master Key from which users can derive their nostr, on-chain bitcoin, and Lightning Login keys. They also built a quick demo app that lets users generate images from AI apps and pay with Lightning using L402.
❄️ Polar released a new version of the rapid prototyping software with support for the latest alpha release of the Taproot Assets Protocol software.
🎮 THNDR Games released an early version of THNDR Avatars and shared that they’re experimenting with Taproot Assets for users to mint their favorite Avatar combinations.
📒 Wallet of Satoshi released v2.2.2 with custom Lightning Addresses, Contact Lists / Address Books for Lightning, and auto-pay for Zaps.
🕹️ ZEBEDEE released a guide and the ZEBEDEE Next.js Template starter kit for Replit to simplify the process for app developers to build global instant payments into their games, apps, and virtual user experiences. Additionally, they’re partnering with Beamable, a platform for game developers to add server-side features by importing a framework into the client-side game code, to streamline the implementation of Bitcoin transactions in gaming.
💌 Walletano introduced a new feature that allows users to send sats through e-mail to onboard their friends.
🎟️ Azteco vouchers can now be bought from anywhere in the world from G2A, one of the world's largest marketplaces for digital gaming products with over 20 million customers.
🚀 Blixt released version 0.6.8 of their self-custodial mobile wallet with a new feature called speedloader. The new feature syncs LN channel db on app startup, leading to robust payment pathfinding.
👁️ Bolt Observer introduced real-time Lightning node monitoring, allowing sub-60 second notifications to be set up on their platform.
🌐 StaticWire allows anyone to rent a virtual tunnel that provides dedicated public static IPv4 addresses for a VPN-like service. The service requires no account setup and payments are made using the Lightning Network.
🛒 Nodeless is working on a FOSS point of sale app that works with both their own service and BtcPayServer. The company recently released SDKs for their API in PHP, Typescript, Python, Golang, and Rust.
🔄 lipa released the latest update to their wallet for businesses, including improvements on NFC payments for simple tap-to-pay UX, and on QR code scanner.
🇧🇷 Bipa has a new logo, a re-designed identity, and a new product: a prepaid credit card with Bitcoin cashback.
🤖 LNDg v1.7.0 is live with faster dashboard loads and updated Autofee logic for their automated node and channel management tool.
💼 Neutronpay’s API now supports payouts in Thailand Baht (THB).
📜 OpenSats announced their first set of grants to Bitcoin projects, and the list includes developer Ziggie’s grant for Bolt12 work on LND, Blixt Wallet, and more.
💍 Bolt Ring is a Bitcoin contactless payment ring that uses LNURL to provide a tap-to-pay payment experience through the Lightning Network.
🐇 RewardsBunny is a crypto rewards platform that gives money back when people shop. They’re now integrated with the Lightning Network through the ZBD API.
🚗 Satimoto now lets people charge their electric vehicles at over 24k EV charging stations across Europe with Lightning payments.
🇿🇦 Adopting Bitcoin Cape Town will be held on January 26-28 in South Africa. The event is organized by the Bitcoin Ekasi and the Machankura teams and will discuss the latest in Bitcoin and Lightning development, within the context of real-world parallel economies and institutions.
💧 Geyser integrated Zaps into their Lightning-based crowdfunding platform, allowing any nostr client to fund Geyser projects.
👷♀️ Qala, the program designed to train the next generation of African Bitcoin and Lightning developers, published the recording of their Proof of Work showcase and the presentation slides from the 8 fellows who showcased their work building on Bitcoin and Lightning.
How Lightning Powers the Global AI Economy ⚡️🌎
According to a UBS study, ChatGPT, the popular Large Language Model (LLM)-powered chatbot from OpenAI, became the fastest-growing consumer application in history by reaching 100M Monthly Active Users (MAUs) in January, just two months after launch. This is typically amazing news for software developers, as nearly all previous applications have had the magic quality of their marginal production costs approaching zero. That is, once a software product like Microsoft Office has been developed, it costs very little to produce the 100th unit vs. the 1000th unit, so each new user creates a marginal profit for the developers.
However, a report from Semianalysis this summer found that LLMs are a new type of software product that don’t follow the same “marginal production cost approaching zero” approach of their predecessors. In fact, they specifically noted that LLMs get more expensive to operate as they scale (where “inference” means each request sent from a user to the backend LLM):
“The real battle is that scaling out these models to users and agents costs far too much. The costs of inference exceed that of training by multiple folds.”
Higher marginal costs because of the nature of the underlying technology mean that LLM developers must be much more vigilant about monetization than previous generations of software product developers. They must simultaneously:
Minimize chargeback risk
Maximize total addressable market
Maximize marginal profits
Luckily for them, bitcoin’s global liquidity and accessibility, combined with the Lightning Network’s instant settlement, low fees, and programmable nature provides the ideal solution to this problem of monetization.
Minimize Chargeback Risk
When a user makes a request to an LLM, the LLM immediately consumes real-world electricity in the form of GPU cycles, and delivers the response to the user. If that user has paid with a credit card, and then successfully makes a chargeback request on those payments, the LLM developer suddenly has no revenue with which to pay their GPU hosting provider bill. Many users exploiting this vulnerability at once could be catastrophic, as the developers will have large bills from their GPU hosting providers to pay, but no revenues to pay them with.
An LLM that requires a user payment over Lightning up-front before doing any computation completely eliminates this risk. The AI4All hackathon produced several projects that leveraged this exact experience, like Satoshi Agent. Because legacy payment networks expose this vulnerability to developers, they are forced to use mitigations like rate limits (e.g. OpenAI only allows 50 GPT-4 requests every three hours) or mandating interaction with a sales team before allowing access to their services… but those mitigations only harm their ability to maximize their total addressable market.
Maximize Total Addressable Market
If total profits = marginal profits * number of sales, and marginal profits are decreasing due to the nature of operating the software product itself, the only way to keep total profits high is to increase the number of sales. But using today’s LLM services requires a credit card and, in many countries, credit card penetration remains below 50%, and even those with credit cards may be priced out of using the services just from the exorbitant international fees!
Anybody with an internet connection can download a Lightning wallet and pay for digital services with instant settlement and low fees, completely eliminating this barrier to market size growth for LLM developers. Further, the most exciting market opportunity the Lightning Network unlocks is that it allows LLMs to pay each other. LLMs operating as market actors buying groceries, booking flights, or paying specialized LLMs for inferences won’t be able to sign up for bank accounts. They’ll need an internet-native currency that allows for programmable, irreversible, instantly settling payments. As we said in our last newsletter: “we anticipate a steep surge in Bitcoin users - and many of them may not be humans.”
Maximize Marginal Profits
Each inference made by an LLM incurs a real-world cost, and some inferences cost more than others. This means that LLM developers cannot let users pay for unlimited usage with a monthly subscription like they are used to with other software products. They must adjust their pricing such that the revenue earned per inference is aligned with its cost. The legacy networks prohibit developers from doing this, as each successful card charge generally costs 2.9% plus a $0.30 base fee, when each LLM request might cost only $0.03.
Imagine developers investing the time and energy to build a powerful new LLM, and deploying it on HuggingFace, a hosting service for LLMs. To ensure they maximally recoup their investment, they require Lightning Network payments up-front that makes each request profitable, which could be as small as 20 satoshis. They also allow LangChain agents, or applications using LLMs, who could be specialized chatbots operating inside of consumer-facing applications, to purchase L402 tokens for repeated access without requiring a human in the loop. This structure best aligns incentives in the AI ecosystem:
LLM developers can focus on building the most performant LLMs, and sell them to the broadest possible market without worrying about misaligned marginal costs and revenues
App developers can focus on building their application, and specifically more specialized functions/plugins like LangChain agents that access the LLMs, without worrying about vendor lock-in to a substandard LLM provider
Consumers get access to a vibrant ecosystem of competitive applications, delivering the highest quality experience for the lowest cost
For LLMs to follow the improvement arcs of past generations of software products and work at scale, this is the business model transition that needs to happen. Lightning Network payments and L402 authentication allow LLM providers to minimize chargeback risk, maximize TAM, and maximize marginal profits. The future is already here – it's just not evenly distributed. 🔮
Lightning Labs News
We’ve recently released several new updates to our entire product stack from LND to Taproot Assets to Lightning Terminal. First, we shipped two minor releases for the Taproot Assets daemon to improve the builder experience on testnet. These releases included improvements to the accessibility and flexibility of Universe statistics for builders looking to create Universe explorers along with some minor bug fixes based on community feedback. On the LND front, we released LND 0.16.4 with a minor bug fix with regard to memory leakage introduced by a CPU optimization with the recently released mempool scanning logic. For Lightning Loop, the latest release introduced a new feature enabling Loop Out and Autoloop Out operations to sweep funds into extended public keys (xPubs) to avoid address re-use where possible. And finally, the latest Lightning Terminal release includes improvements to LND accounts, custodial off-chain accounts, which adds functionality to query information for any specific LND account, as well as enabling labeling of accounts.
CEO Elizabeth Stark joined Alex Li from the Human Rights Foundation on a fireside chat at the Oslo Freedom Forum to discuss central points of control over open protocols, adoption of the Lightning Network in emerging markets, the challenges around usability and standardization, and the importance of Lightning in the fight for freedom and democracy.
CTO Olaoluwa Osuntokun spoke about the intersection of the Lightning Network and AI at a Lightning event at Shack15 in San Francisco and was one of the judges for the AI4ALL hackathon.
Director of Business Development Ryan Gentry spoke about the next frontiers of Lightning at The Power of Lightning Summit in Nashville, discussing the current state of Lightning, the significant growth of its ecosystem in recent months, and potential breakthroughs that could increase the network's volume by orders of magnitude. These innovations include transforming Lightning into a multi-asset network with Taproot Assets, constructing a machine payable web combining AI with LN, and developing open social media protocols.
Developer Advocate Hannah Rosenberg led a workshop for the AI4ALL hackathon guiding devs through essential tools and techniques necessary to monetize AI applications effectively. She explored the usage of Aperture with a Lightning node, the generation of L402 tokens, and the implementation of service gating requiring an L402 for access.
Are you a security engineer with experience in securing web, Bitcoin, and other public-facing network services, penetration testing, and both automated and manual source code security reviews? We are hiring for a Security Engineer!
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Join us in making magic internet money a reality! 🧙♂️
Thanks for reading!