Bitcoin's Lightning Network launches a new market for liquidity in the payment channel

Bitcoin's Lightning Network launches a new market for liquidity in the payment channel - bitcoin lightningThe Bitcoin Lightning Network software team is launching a new market for Lightning users who, from now on, will be able to rent cash for payments on the second tier network.

The Pool service

On Monday, Lightning Labs announced the launch of Pool, "an unsecured peer-to-peer marketplace for Lightning node operators to buy and sell access to liquidity," according to a press release.

The service will allow Lightning Network users to lend bitcoins across payment channels in exchange for a fee. Businesses and service providers can then tap into this liquidity when needed to manage Lightning Network payment flows. “An efficient allocation of capital is one of the biggest weaknesses when using the Lightning Network.

Existing node operators do not have access to price signals to determine where in the network their outbound liquidity should be allocated, and new node operators have no way of signaling that they need new inbound liquidity, ”the press release states. . "Lightning Pool brings these two parties together into a single market allowing them to retain custody of their funds."

Pool provides a market for the liquidity of the Lightning Network

Bitcoin's Lightning network offers cheaper and faster payments than the main Bitcoin network (here the quotation in real time) by downloading these payments to a "second layer" (software that is built on top of the original Bitcoin software).

Lightning handles payments through two-way payment channels, where both parties hold a certain amount of funds locked in one channel. Sending payments outside of a channel requires a “routing” transaction.

Suppose Alice has a channel with Bob and Bob has a channel with Carol; if Alice wants to send a payment to Carol, she can direct him through Bob. But what if Bob doesn't have enough funds in his channel to complete the payment?

This is the problem that Pool wants to improve. Businesses or users who manage multiple channels can now buy liquidity from the market to replenish channel reserves for routing. On the other hand, Lightning Network node operators can now pledge their inactive bitcoins by offering them as liquidity on Pool, Lightning Labs CTO Olaoluwa Osuntokun explained.

“LiFi”: Lightning native financial services

Lightning Labs is marketing the service as a flagship of Lightning Finance or "LiFi," a way for Bitcoiners to generate unsecured returns on their bitcoins, instead of lending them through custodians like BlockFi or turning them into bitcoin wrapped for yields. farm DeFi.

The new service is being tested in a private alpha version with "many major exchanges, wallets and service providers testing it in the background to make sure it had enough liquidity at launch." The maximum order amount at launch will be 10 BTC, although Lightning Labs will increase it in the future once the platform has undergone sufficient stress testing.