Lightning Labs Allows Users to Earn Interest on BTC by Providing Capital to LN

Lightning Labs has launched a marketplace for liquidity on the network.

The startup focused on developing the Layer 2 payment channel for Bitcoin, Lighting network, has opened the door to “LiFi” – Lightning financial products.

This non-custodial, peer-to-peer marketplace “transforms” your Lightning liquidity into a tradable asset on the Lightning Pool, allowing the user to buy or sell access to this liquidity.

In simple words, “People can earn interest on their BTC by helping to provide capital to the Lightning Network, while keeping control of their funds.”

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Unlike decentralized finance (DeFi), where a third party is the one with the custody of your funds, as in the case of Wrapped Bitcoin (WBTC), it is BitGo; Lightning Pool allows sellers to earn yields on their BTC without trusting a third party with their sats.

“The yield is earned from buyers on the Pool willing to pay a premium for access to new capital on Lightning without counterparty risk,” reads the announcement.

The lack of liquidity on the liquidity Network has been an obstacle, “one of the most widely felt pain points,” to its adoption, which the marketplace is addressing through Pool, which will allow everyone to participate.

“We developed Pool out of a need in the market that emerged from Lightning users who were looking for new sources of liquidity to enable them to more efficiently receive funds and transact on Lightning.”

In the beginning, the payment channels will have a maximum leasing time limit of two weeks or 2016 blocks, which will be diversified to six months. The liquidity provider will receive fees on their Pool account up-front.

“Pool features a p2p auction mechanism, batched execution, and a new concept called shadowchain using bitcoin script.”

Currently, it is in closed alpha with exchanges and wallets to make sure when it launches, it has enough liquidity. And because this is not DeFi, the maximum account size, for now, is 10 BTC as it is early and needs to be stress tested.

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Author: AnTy

Asia, Africa, & South America Combined Accounts for Less than 10% of Lightning Network Nodes

About 87% of all the Lightning Network nodes are LND nodes. In comparison, about 11% are C-Lightning, and only 2% of the remaining are Eclair, according to the latest report by members of the Faculty of Computer Science from the University of Vienna, Austria, and Christian Decker of Blockstream, Zurich.

Lightning Network is a layer 2 solution on the bitcoin network for scalable and instant transactions. It currently has a capacity of 1,040 BTC with 14,273 nodes running it, as per 1ML.

In the past couple of years, several implementations of LN have popped up.

In early 2018, Twitter CEO and bitcoin proponent Jack Dorsey-backed Lightning Labs’ CEO Elizabeth Stark, announced the initial release of LND for developers to make it available for testing purposes on the main Bitcoin network.

C-Lightning is Blockstream’s own implementation of the Lightning Network built in the C programming language.

Eclair is for those who want to set up a full Lightning Node, which needs a lot of computer know-how. With this approach, you are routing transactions on the network and can also make your own transactions.

Geographic distribution of LN Nodes

The report titled “Node Classification and Geographical Analysis of the Lightning Cryptocurrency Network” also found that a large share of the total Lightning Network nodes, 44.8%, are located in North America and close behind is Europe with 43.1% share.

In Europe, most of these nodes are located in Central Europe with a very high node distribution on both the East Coast and the West Coast.

The remaining nodes are located in Asia at 6.2% share, Oceania at 2.2%, and then South America and Africa, each having 0.8% and 0.6% of the Lightning Network nodes.

In Asia, most of the nodes are located on the coasts of South Korea, China, and Japan.

It has been further found that multiple node clusters are centered in metropolitan areas. For instance, in Germany, the largest node hub is located in the metropolitan area in Berlin and then Munich and Frankfurt. In Japan, this has been found true with Tokyo, Osaka, and Kobe.

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Author: AnTy

Lightning Network’s Ready for the Next Step in its Evolution; Bitcoin Capacity Across Channels Hits Peak

The cumulative capacity across all channels on the layer 2 solution of bitcoin Lightning Network has hit an all-time high at 1,106 BTC, worth about $11.8 million at current bitcoin prices, as per 1ML.

The previous high was in early May 2019 at 1,099.7 BTC, worth about $6.5 million at that time.

Source: Bitcoin Visuals

The number of channels is also approaching the peak of 40k from mid-March 2019, as it currently hovers around 37,600. As for the number of nodes that open payment channels with each other funded with BTC, it is above 7,600.

Amidst this, Lightning Labs, which maintains the Lightning Network Daemon (LND) implementation of the Lightning Network, started supporting Wumbo with the release of Ind 0.11-beta — channels over the 0.1677 BTC limit originally imposed to discourage users from putting too much money into the early software.

This latest development means “the software has progressed to a point where advanced users, companies, and node operators can opt into larger channels.”

“Enabling Wumbo was our signal to the rest of the world that the Lightning Network is ready for the next step in its evolution,” states Lightning Labs.

This evolution involves a world where Lightning nodes are as “ubiquitous as the TCP/IP driver,” and every device from the mobile phone, laptop, desktop, router, and network switch can send/receive payments, authenticate themselves, and send end-to-end encrypted messages without a trusted third party.

Just last week, Lightning Labs also added accounting reports to the suite of tools for Ind to help users track sats. And with Wumbo and Faraday, it expects more and more companies to enable Lightning for its users.

Blockstream, which maintains the c-lightning implementation, also updated its tech stack in the form of channel management and routing tools.

The latest version 0.9.1 of c-lightning improves the likelihood of larger transactions to find a route between the sender and receiver while removing the bugs to make the process more efficient.

Additionally, with multifundchannel plugin, it is now possible to open multiple channels with a single transaction.

Also Read: Bitfinex Launches Wumbo Lightning Network Channels

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Author: AnTy

Visa’s Fast Track Program On Boards New Bitcoin Lightning Payment Startup, LastBit

The Visa fast track program has onboarded a new Bitcoin Lightning crypto payment startup, LastBit, which recently launched its beta app. This addition comes barely a month since Strike also joined the Visa initiative to scale crypto adoption through Lightning BTC payment solutions.

Lastbit will enable merchants to accept BTC payments regardless of their preference since the underlying tech converts such transactions to fiat upon settlement. Currently, this BTC lightning-based innovation only allows merchants to receive their payments in U.S dollars. However, they are set to release an app that is Euro compatible in a few weeks, according to the company’s founder, Prashanth Balasubramanian.

LastBit’s BTC Lightning for Micropayments

Despite the rise of Bitcoin and other cryptocurrencies, mainstream adoption is still one of the most significant uncertain factors. Well, BTC lightning solutions, which came up as a result of network congestion, seem to be finding a niche in micropayment fiat-crypto on-ramps, given the convenience in rates and transaction time.

LastBit’s lighting payment, for instance, allows users to load BTC on their applications, after which they can access a digital debit card. With this card, they can then initiate BTC payments, which are received by vendors in dollars and soon Euros.  Balasubramanian has since noted that their goal is to facilitate the mass adoption of Bitcoin as a standard means of payment,

“We simply want to see the masses using bitcoin on a day-to-day basis. To do this, we have engineered arguably the most seamless interoperability between bitcoin and fiat, on top of the Lightning Network, that caters to the needs of both new and experienced users alike,”

Prospect Markets!

As the world continues to move towards digital ecosystems, crypto startups like Stripe and LastBit are looking to capitalize on the growing opportunities in various markets. On this front, LastBit is set to expand into Europe following approval from the EU. Balasubramanian confirmed this prospectus move with Coindesk, highlighting that;

“With a solid product, partnerships and notable investors […] behind us, we’re going to roll out our Bitcoin, Lightning, and EUR interoperable payments layer in the EU to prove that this works and that a small company without millions can pull off a complex payments product to push for Bitcoin adoption,”

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Author: Edwin Munyui

Visa Partner Non-Custodial Lightning Network Wallet Zap Secures $3.5M Funding

The non-custodial Lightning Network wallet Zap has closed a $3.5 million seed round led by Green Oaks Capital, which previously backed Robinhood and Stripe. Morgan Creek co-founder Mark Yusko and Anthony Pompliano also joined the round.

This big development came just months after the payment startup partnered with Visa. Zap currently employs 13 people from all over the world.

Jack Mallers founded zap, and before, the Maller family funded April. Jack’s grandfather helped found the Chicago Board of Exchange (Cboe) and then co-founded First American Discount Corporation with his son.

The core of the product Lightning Network is the second layer of bitcoin, which enables faster and cheaper transactions.

With this open-source non-custodial wallet, users’ don’t even know they are using bitcoin as they use dollars.

“One of the early use cases for us is content creators. Journalists or video game streamers or adult film actors and actresses, put up profiles backed by our infrastructure, and anyone in the world can tip them,” Mallers, 26 told Forbes.

Zap launched its flagship product Strike, a Lightning native neo-bank that addresses pain points for the mass adoption of crypto. In June, the company announced it was admitted to Visa’s Fast Track program and would be launching its card within a year. Strike rewards and Strike merchant tools would also be coming shortly, he said.

Twitter and Square co-founder Jack Dorsey who is a bitcoin advocate have also taken an interest in Lightning with investing in Lightning Labs, the leading developer of Lightning Network.

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Author: AnTy

Lightning Labs New LSAT Protocol Promises To Do Away With Usernames And Passwords

A statement from Lightning Labs CTO, Olaoluwa Osuntokun, revealed the specs of the Lightning Service Authentication Tokens (LSAT) which is expected to act as a ticket of some sort. The new protocol can be used as both a medium of exchange and authentication token replacing passwords and login credentials for a minimal fee.

“LSAT is a new protocol standard for authentication and paid APIs (using the Internet’s preferred currency: sats!) developed by Lightning Labs which leverages the widely underused HTTP 402 (payment required) status code.”

The statement further released the Aperture, a reverse proxy for LSAT, and is currently in use on Lightning Loop. Olaoluwa released the specifications of the LSAT network, which will enable businesses to leverage infrastructure.

The LSAT authentication ‘key’

Imagine you wanted to log in to Facebook, Instagram, Twitter or Snapchat and all you needed is to pay a very small fee and keep the receipt. Then you do away with the need for a login process – no forgetting passwords, no logins. Notwithstanding, this system will make your account safe from hacks.

Well this is what LSAT promises its users by acting as an authentication key for an online service. This new system that has combined the Bitcoin Layer 2 solution and HTTP 402 (payment required) systems will also allow users to pay directly online using satoshis.

LSAT like regular cookies…but cryptographically secure!

“One can view LSATs as a fancy authentication token or cookie.”

LSAT, however, registers credentials that are cryptographically verifiable ensuring security on accounts. Olaoluwa further explained the system is “useful for system providers who expose an end API to the user” especially in large data storage services, access to rights on various data indices and also metered video streaming services such as the Aperture, also unveiled in the statement. Olaoluwa explained,

“Aperture can be used to easily create a new LSAT-aware paid API or service, and even seamlessly upgrade an existing web resource or API to make it LSAT-enabled, creating a portal from the existing web to the new Lightning-native web.”

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Author: Lujan Odera

Is The Lightning Network Becoming More Centralized? 10% Of Nodes Hold 80% Bitcoin

The Lightning Network has been touted as the possible solution for the Bitcoin scalability concerns. However, various researches have indicated that there is a small percentage of nodes that handle most of the funds in the network. Is the decentralized finance product becoming more centralized?

The widespread adoption of the Bitcoin has now come with the scalability of the technology the BTC is built on. With reports indicating that the Bitcoin has the ability to process only a specific number of transactions per second proportional to the size of a block and its release frequency.

The Bitcoin Lightning Network (LN) has been touted as the solution to the scalability concerns. It is a “Layer 2” protocol that operates on top of Blockchain-based cryptocurrencies. An attempt to create a payment platform that overlaps over a cryptocurrency such as Bitcoin affording users cheaper and faster transactions.

A research paper points out that there is unequal distribution of wealth in the Lightning Network with some nodes holding most of the funds. Notably 10% of the nodes are controlling 80% of the funds in the Network. This exposes the vulnerability as they cannot afford to lose the nodes as they are too essential to operations.

“As only about 10% (50%) of the nodes hold 80% (99%) of the bitcoins at stake in the BLN… Removing hubs leads to the collapse of the network into many components… suggesting that this network may be a target for the so-called split attacks.”

This could be solved by lowering the barriers which may incentivize individuals such as hobbyists to take up running routing nodes. Meaning they could setup infrastructure at reduced costs as Christian Decker lightning engineer at bitcoin tech startup Blockstream explained.

After detailed analysis by researchers on the evolution of the global nodes that carry out transactions in different geographical locations they were able to determine the various nodes transactions pass through.

The end nodes are mostly passive as they just await to send and receive. However, it was the center (routing) nodes that picked up the slack by directing transactions throughout the network. This has resulted to some of them overcharging a little for their services.

In a report by Hebrew University researchers demonstrated how to exploit vulnerabilities and carry out a congestion attack that would render some routes locked for up to days. The results were damning as they proved they could effectively lock up most of lightning’s liquidity causing instability to the network.

Mr. Decker was not worried as he explained that criticizing their model could only lead to progress.

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Author: Lujan Odera

Lightning Labs Raises $10M And Launches ‘Loop’ Beta For Faster LN to BTC Payments

Lightning Labs has managed to raise $10 million in a Series A funding that is meant to help the company launch the first merchants’ service for Bitcoin (BTC) payments.

The round was led by Craft Ventures. Managing Director Brian Murray joined the board of directors at Lightning Labs, while other investors were David Heller, the former head of securities at Goldman Sachs, Slow Ventures, Ribbit Capital and Avichal Garg of Electric Capital. This is what Murray said about the service Lightning Network is providing for BTC:

“If Bitcoin is going to reach its potential of being a global currency then it’s going to need to go much faster and cheaper than the base layer. Visa is the payment network that facilitates a lot of the ways currency moves around the world, this is like the service the Lightning Network provides for Bitcoin.”

Lightning Labs LND Raised $2.5 Million in a Seed Round

Back in 2018, Lightning Labs launched the beta version of LND, its scaling solution. It has raised $2.5 million in a seed round. In June 2019, it launched a mobile wallet app.

Starting today, it’s offering the Lightning Loop paid service. Loop is meant to help with the management of merchants’ payment channels, as Lightning channels need to have BTC in them if they are to remain open. Only a balanced in-and-out flow allows them to remain open, so those who are using them have a serious problem. Lightning Labs’ CEO, Elizabeth Stark, had this to say about Loop:

“Loop ‘in’ helps people put funds into their existing channels… kind of like a prepaid debit card for a lightning account. Loop ‘out’ is currently the most popular product because it allows people to continue receiving funds on lightning.”

Loop Hels with Maintaining Liquidity in the Channels

The Loop service will charge only a small percentage from each loop, helping exchanges and merchants keep liquidity in the channels. Stark thinks Lightning Labs is different from other startups offering the same services because it’s turning into an “infrastructure provider”.

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Author: Oana Ularu

Zap Lightning Network Wallet Founder Launches Strike, The ‘Best Shot’ of Achieving Mass Adoption

The Lightning Network wallet Zap founder Jack Mallers has announced a new application called Strike that will allow you to make Lightning payments with your debit card or bank account. This means, there will be no wallet, no channels, nodes, swaps or liquidity management anymore.

Built on Olympus, it is “designed to usher in an era of Bitcoin that we believe has the best shot of achieving our mainstream hopes and desires.”

Mallers explains in his Medium post that volatility is the prime issue they had because while it is an opportunity in the market, in a consumer-merchant setting it is a non-starter, making it “extremely” difficult for them to accept bitcoin.

Another big issue is taxes. In the US, bitcoin is taxed as property and spending it a taxable event which even extends to the Lightning Network.

“As a merchant, this was arguably a bigger issue. (…) The tax headache was not worth it, and nearly all merchants opted out of accepting bitcoin.”

Creating a wallet, custody and owning Bitcoin was another as people didn’t want to. With Strike, Mallers says,

“We aren’t just changing how Bitcoin looks, but also how it feels. We’re changing a consumer’s relationship with Bitcoin and Lightning, how it is used, and how it is viewed. We’re opening up new ambitions, new ideas, new possibilities, and a new, mainstream audience.”

This product can be used to buy Bitcoin and sell it and by simply scanning the QR code and clicking pay, used for remittance payments and for internet tipping as well.

But it isn’t a custodial wallet so if you are hacked and your BTC stolen, then no one can do anything about it and you have completely lost them.

The second layer on the Bitcoin network, Lightning Network offers real-time cheap settlements, where Strike aims to make the barrier of entry low but high flexibility and ease of use.

Strike is expected to be live on App Stores in the coming months meanwhile to join the beat list of the project, you can go to strike.zaphq.io.

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Author: AnTy

Will Blockstream’s Watchtowers Help Keep The Lightning Network Safe From Attacks?

The Lightning Network (LN) may be controlled and ordered by Watchtowers in the future. Watchtowers are guided by Blockstream’s c-Lightning team and would be a very important improvement on the Lightning Network, the second-layer scaling solution proposed to solve Bitcoin’s scalability issues.

Lightning Network Controlled By Watchtowers

At the moment, the Lightning network works with fraud proofs in order to avoid channels that steal funds. Watchtowers will solve this issue in a new enforcement proposal for the LN called Eltoo. Offline users can protect their funds by deferring to Watchtowers.

This is not the first time that this solution is proposed or tested. Indeed, Lightning Labs and other developers have been working with it. However, this is the first time that such a solution would be implemented on c-Lightning.

In order to protect users, Watchtowers register information from users and store it locally. At the same time, they would be very useful for those nodes that go frequently offline. Nodes that are run by cellphones and similar devices are generally less stable than others.

The c-Lightning developer Christian Decker explained that these Watchtowers are going to play a very important role when users run an unreliable network.

During the last years, the Lightning Network has been growing as a solution for the scalability issues that are affecting Bitcoin and other cryptocurrencies. However, it still needs some time to be developed and tested before it is able to reach the market.

In order for the new Watchtower solution to be approved, it is necessary for the Taproot Bitcoin Improvement Proposal (BIP) to be accepted by the whole Bitcoin community. It is worth pointing out that some months can pass before the market sees this implementation on the Lightning Network.

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Author: Carl T