The Flywheel Is Starting to Spin: Lightning Network Effects in Action 🕸

Jul 22, 2021

Welcome to the July edition of the Lightning Lab, a newsletter filled with Lightning Network updates, community coverage, and, of course, memes! In this issue, we discuss how the Lightning Network flywheel is really starting to spin as the efforts of the past several years are beginning to compound.

The Flywheel Is Starting to Spin

Lightning’s role as internet-native digital money has seen a surge of interest, growth, and usage since stealing the show at Bitcoin 2021 in Miami last month.

Vetle Lunde @VetleLunde

The BTC capacity in lightning is growing at a blistering rate!⚡️ 1,100-1,200 BTC: 39 days 1,200-1,300 BTC: 34 days 1,300-1,400 BTC: 19 days 1,400-1,500 BTC: 13 days 1,500-1,600 BTC: 9 days 1,600-1,700 BTC: 15 days 1,700-1,800 BTC: 5 days @ArcaneResearch

CoinDesk @CoinDesk

Last time around, it took a whole year for the #Bitcoin #LightningNetwork node count to double from 5,000 to 10,000. Three months later, it's over 23,000. Report by @ps_myles

trib.alBitcoin’s Lightning Network Node Count Doubles in 3 Months - CoinDeskThe Lightning Network has seen rapid adoption over the past months. The network’s capacity has grown by yet another 100 BTC in only 5 days.

For readers of this newsletter, however, this surge should come as no surprise. We have been highlighting what the builders are building on the Lightning Network for the last year, and their hard work starting to compound is causing exponential growth.

CoinDesk @CoinDesk

“The idea that it’s merely a digital rock fails to tap into the very nature of what bitcoin can do,” says @starkness. “Bitcoin is programmable money, and Lightning can help scale it to billions of people across the world.” By @jeffwilser @lightning

trib.alBitcoin: Lightning Will Change How You Think About BTC - CoinDeskThe recent bull run was largely about bitcoin (BTC). Lightning is a grander vision, and developers say it’s slowly becoming a reality.

This ecosystem-wide laser focus on bringing bitcoin to the billions, not billionaires, has now led to the President of El Salvador giving a live presentation on how their country’s new open monetary system based on bitcoin will operate (unlike other larger nation states focusing on surveillance systems)… and we’re only three years in!

nic carter @nic__carter

a sitting head of state patiently explaining bitcoin based payment systems. surreal

According to Nicolas Burtey, the founder of Galoy who built the Bitcoin Beach Lightning wallet, the success of Bitcoin Beach has inspired the world. As this year progresses, expect to see more communities across the globe switching over to a bitcoin standard, plugging into bitcoin’s open monetary network, and reaping the benefits of Lightning’s compounding network effects.

Of course, the community recognizes there is so much left to be built, and is seizing the opportunity with a summer of hackathons. ☀️

🕵️ Impervious is hosting a global hackathon from August 4th - August 20th to commemorate the launch of their public API, with $25k in BTC prizes for the winners.

🏰 Fulmo is hosting a developer conference at Burgscheidungen Castle in Germany the weekend of August 6th.

👨‍💻 Pleb.fi is hosting a developer conference and hackathon in Austin the weekend of August 21st with prizes of at least $5k for the winning team.

🏝 We hear there are more LN hackathons in the works for September already. 👀

Mo users 🔄mo volume 🔄mo fees 🔄mo nodes 🔄mo devs 🔄mo users.

You simply love to see it. 🚀

News & Updates

Lightning Stats

🙌 OpenNode and ACINQ opened a 10 BTC (~$310k) channel, the largest public channel to date, demonstrating both increased demand for payment volume and faith in network stability.

🤑 Bitfinex routed a 0.9 BTC (~$27k) payment, which may have been the largest payment to date (though OpenNode disagreed), and increased their deposit/withdrawal limits over LN to 5 BTC (~$155k).

💰Bitaroo one-upped Bitfinex the next day with a 1 BTC (~$30k) deposit, adding that their exchange has processed 1300 BTC ($41M) in LN volume over the last nine months.

🚰 LNPay shared statistics on their popular faucet product before sunsetting it: in the 18 months it was offered, over 72M sats ($22.3k) were withdrawn to >3k nodes across 284k different withdrawals.

🎧 Satoshi’s Stream published that the number of value-for-value enabled podcasts recently spiked 40% in a week up to 387. The Podcasting 2.0 movement isn’t slowing down!

🔥 Ring of Fire and Plebnet, two grassroots and global Telegram communities of Lightning node operators, have collectively added at minimum 786 nodes and 95 BTC ($2.8M) of liquidity across 3k channels in the last few months.

⚡️ Lightning Network Plus, a new community tool for organizing group channel opens, has facilitated 1,639 new channel opens totaling 42 BTC ($1.3M) for 584 unique users… in just the last three weeks!

Lightning Ecosystem

🛒 OpenNode launched a new bitcoin payments plugin for BigCommerce, a $4B public company whose 60k online merchant customers can now accept bitcoin over Lightning.
🏞 River Financial added Lightning support to their mobile app, enabling customers of their bitcoin brokerage to pay Lightning invoices or receive over the network.
🍭 Lightning Crush, a new bitcoin-based mobile game powered by Zebedee’s Lightning SDK, announced their debut in the Play Store. The first tournament is this weekend at MintGox!
🤫 N2N2 gave a sneak peek of their yet-to-be-released app, a censorship resistant social networkbuilt on Lightning. We expect to be hearing much more very soon!
🤓 MIT Digital Currency Institute published an executive summary detailing their Fidelity-sponsored research on a Lightning Network Interest Rate, can’t wait to read the whole report!
❤️ Bitcoin twitter found a street vendor’s Lightning address QR code in a picture of El Zonte, El Salvador, and donated $1000 worth of bitcoin in a 5 day #iceshaverchallenge.
✊ Alex Gladstein, CSO for the Human Rights Foundation, published another inspiring Bitcoin Magazine article focused on how developers like Fodé Diop are using bitcoin and Lightning to free their West African countries from the last vestiges of colonialism.
💨 Breez wrote an excellent Bitcoin Magazine article about scaling Lightning through the decentralized marketplace of Lightning Service Providers that is Lightning Pool, and has also started a new blog series called ⚡️Lightning In the Wild⚡️ showcasing how their users use LN to solve problems every day.
➰ Seetee started a new LN-enabled podcast caused Closing the Loop hosted by John Vallis. We’re excited to see what new engagement features they come up with!
🍾 Bottlepay released version 1.7.8 of their Lightning mobile app with personalized QR codes, better social sharing tools, and much more.
💰 Flitz announced a new Lightning-powered app for users in Germany, France, the Netherlands, and Belgium to buy bitcoin directly into LN wallets.
🥞 Stacker News launched a Hacker News-inspired news aggregation website powered by LN for authentication, tipping, and much more.
👌 Strike lowered the fees to buy bitcoin on their app to zero, telling Bitcoin Magazine their goal is “to be the cheapest and easiest place on the planet to acquire bitcoin.”
🎨 Scarce.City continued to ramp up the Lightning-powered auctions highlighted by their “Mega Event”: 12 sales leading up to a headline 72 hr auction that cleared 1.9 BTC ($50k).
📈 LN Markets shipped a new UI and new docs for their Lightning-enabled exchange, making it easier than ever to stack sats over LN as a trader.
🤯 Alyse Killeen, GP at Stillmark and one of our awesome investors, appeared on Preston Pysh’s podcast and on Bloomberg TV to drop knowledge on investing in bitcoin companies and how bitcoin’s layered approach is best for long-term growth.
🎮 Fulgur Ventures wrote a research article for Bitcoin Magazine on Bitcoin in Gaming, detailing how bitcoin-based micropayments increase engagement, enable new monetization models for developers, and are poised to revolutionize the industry.

Lightning Network Effects in Action

We called our Series A blog post Entering the Decade of Lightning because we knew that the impact of Lightning’s network effects will be far broader and longer lasting than any could imagine at the time. Global macro investor Lyn Alden explained the theory in her blog post Analyzing Bitcoin’s Network Effect a few months ago.

This summer is clear evidence that the flywheel is starting to spin, and that theory is quickly becoming a reality. The number of public nodes on the network increased by 40% and the public network capacity increased by 66% since March 9th when Lyn posted her article. We believe there are four main factors driving this growth:

First, developers have built tooling that abstracts away enough of the protocol complexity such that enthusiast communities like PLEBNET and Ring of Fire can pop up and start seeing success right away. PLEBNET member Erin Malone is the perfect case study of such a user, sharing her story on Twitter earlier this weekend, which went viral.

Erin Malone @ErinEMalone

1. 10 weeks ago, I joined the @lightning network barely knowing how to open a channel. Last week I became a profitable lightning network routing node. Here's a thread on the ultimate strategy game for LN node operators from one #Bitcoin pleb to another. 👇👇👇

Second, real sustainable volume growth across the board has led to large influxes of capital to/from popular nodes as seen by the nodes with the largest capacity increases over the last 30 days.

Third, the remittance use case has successfully crossed the chasm thanks to Bitcoin Beach, Galoy, Strike, and El Salvador. There is a huge amount of inbound interest in an LN integration from exchanges and wallets with users in remittance-heavy countries. Importantly, local users aren’t waiting around for larger companies to build new products, they’re moving to mobile-first LN-native options like Breez, Muun Wallet, or Bluewallet. Watch this space 👀

Lastly,

Ryan Gentry @RyanTheGentry

4) people are catching on to the fact that LN is more than just a payments network, it's an incentivized private data network where satoshis are just one kind of data. @ImperviousAi gets this, @sphinx_chat gets this, @SatoshisStream and @PodcastindexOrg get this...

Ryan Gentry @RyanTheGentry

Every routing node has four natural resources it can monetize: bitcoin liquidity, storage, bandwidth, and compute. We've already started building a marketplace for allocating liquidity with @LightningPool. When marketplaces for the other three start showing up, watch out 🤯

So developers have built apps that have clearly attracted more users who are bringing more volume to the network which is incentivizing more nodes. Now it’s time for the continuation of the flywheel where increased developer interest leads to new applications being built that attract even more users.

The good news: the community is stepping up with the summer of hackathons. ☀️

The better news: developers are realizing that building on Lightning rails opens up monetization possibilities for creators that fiat rails simply cannot compete with.

Rohun vora @rohunvora

$ breakdown of a podcast episode that uses Lightning: 100,000 listeners. 60 minutes. 10 sats per minute. Each listener pays: 20 cents Creator makes: $19,455

The best news: we’ve already seen this play out before! As we’ve learned from the history of Lightning, building follows price. When the bitcoin price spiked in late 2017, we saw the initial mainnet releases of Lightning and a surge of developer interest, which then led to the first LN-native applications and companies. When the bitcoin price spiked again in early 2019, we saw public LN capacity more than double to 1000 BTC, along with the first wave of seed fundraising into new Lightning companies like Bottlepay, Fold, Zap/Strike, and Zebedee.

Following the most recent bitcoin price run-up, the public LN capacity has almost doubled again from 1000 BTC to 1953 BTC today, and the number of reasons to build on Lightning is only accelerating. We fully expect for history to repeat itself as the flywheel spins. So, it’s time to build, it’s time to invest, it’s time to run a node. Don’t miss out, it’s time to get on board the Lightning flywheel. ⚡️

Lightning Labs News

Products

In June, we released lnd 0.13-beta which included a host of long-awaited features: atomic multi-path payments to enable static invoices, default anchor channels clustered lnd, PSBT pubkey import, pruned node support, and more!

We also ramped up the educational content for developers and node operators with new additions to both our Builder’s Guides to the LND Galaxy (like the Guide to Lightning Loop, Understanding Liquidity, and Node Recovery) and our Youtube channel (like RUN LND).

Media

Coindesk wrote a feature piece titled The Lightning Network Is Going To Change How You Think About Bitcoin, including quotes from Elizabeth Stark, Desiree Dickerson, and Ryan Gentry.

Elizabeth Stark discussed Lightning and the Creator Economy with the ultimate influencer Paris Hilton at M13’s Future Perfect virtual event.

Laolu Osuntokun spoke about Bitcoin & Lightning For a Billion Users on Stephan Livera’s podcast.

Wilmer Paulino appeared on a virtual panel to talk Latin American Lightning adoption hosted by Paxful.

Hiring

Want to bring bitcoin to the next billion people? We are hiring a LATAM Project Manager to support the rapidly growing Latin American Lightning community.

Other roles include:

Chief of Staff, Designer, Technical Product Manager, Executive Assistant, Finance and HR Manager, Head of Memes, Lightning Infrastructure Engineer, Senior Engineering Manager, Talent Lead, Marketing Lead