2020-11-4 23:22 |
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.”
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.
The post Lightning Labs Allows Users to Earn Interest on BTC by Providing Capital to LN first appeared on BitcoinExchangeGuide.
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