Lighting Pool It allows bitcoin holders to generate unmanaged income directly from their bitcoin holdings , Not through a trustee or DeFi Income farming .

Original title :《 Exclusive online finance LiFi: Smoke screen or competitive alternative ?》
writing :Guillaume Girard

From the original Messari, The following is a full-text compilation :

「 As the cost of bitcoin goes up , Lightning network will be the best bitcoin expansion solution to date . It will be used by more and more enterprises and payments , But I'm also very optimistic that lightning network will be used by financial institutions , At low cost 、 The way to trust is to settle immediately .」

——Romain Rouphael, LNMarkets cofounder

As bitcoin becomes more and more popular , Obviously , People will look for ways to trade more cheaply on the chain . To solve the scalability problem of bitcoin , Lightning network has been one of the solutions proposed by bitcoin people for a long time . However , More than six years after it was first proposed , In the last 「 High value 」 After three years of the cycle , Lightning networks are still not reaching any meaningful adoption , therefore , Its status as a de facto extended solution has also been questioned . From the lack of incentives to start liquidity to the complexity of interacting with the protocol as an ordinary user , People have reason to ask , Whether lightning network can realize its ambition ?

Lightning Network Overview

Lightning network (LN) It's the largest tier 2 payment channel network . A channel network consists of a series of separate payment channels , When they're connected in series , It's possible to achieve fast 、 Low latency payments . Because of the off chain nature of these payments ( Only the final summary goes into the blockchain ),LN The cost of payment on the base time chain is usually much lower than the equivalent payment on the base time chain . In order to be able to send money on such a network , Users have to open a payment channel to another participant on the network . Once the access is opened , Both participants can send and receive almost unlimited amount of funds outside the chain , And may never close the channel on the chain . Again , In order to receive funds on the Internet , The user needs the other side to open the receive channel . however , A participant can only send and receive the total amount of bitcoin in the channel promised by both parties .

And this requires the routing node to play a role , Individual nodes are willing to allocate their bitcoin liquidity , Routing payments between two parties without direct contact . However , Today's node operators are facing many problems , Such as the lack of economic incentives and cash flow volatility . Although these are not LN The only problem , Hinders its adoption as an effective scalability solution , But there have been a lot of improvements , It's just that people are interested in improving the user experience 、 There is a growing interest in better capital allocation and better understanding of potential attack vehicles . Despite these uncertainties , around LN Our industry has developed into one of the most exciting vertical areas , Many companies are making micro profits 、 Private information and games are at the forefront of innovation .

When it comes to adoption ,LN Since it was founded three years ago , With the help of a strong developer community , Has been growing steadily . In this report , We're going to delve into the state of lightning networks , To assess if it's ready for mass adoption , Because the next one 「 High charge cycle 」 Obviously right in front of you . Besides , We're going to look at some of the most disruptive innovations in the field , And pay special attention to financial applications .LN Success or failure is the most important , Because it will determine the future of bitcoin as a trading medium .

The state of the lightning network

If we expect LN In the near future, it will become a practical solution for large-scale bitcoin transactions , So the logical step is to ask questions : Is lightning ready ? To answer this question , We have to take a look at self first 2018 Major improvements since .

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

Although the data in the figure below shows the significant growth of the network in the past year , But what can't be ignored is , Compared to other ambitious projects in cryptocurrency , The increase is very small . And lock in DeFi Medium BTC comparison , Lightning network 6500 Thousands of dollars in TVL Even disappointing . At the time of writing , There are more than 80 Billion dollars are locked in WBTC,7100 Ten thousand dollars are locked in RBTC (RSK Side chain ).

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

Major transactional improvements

Wumbo

Wumbo The upgrade marks the development of the software to advanced users 、 The extent to which companies and node operators can choose to enter a larger channel . The standard lightning channel was initially limited to 0.1677 BTC, To limit users' exposure to the risks of new networks . Now , As a result of the lifting of this restriction ,Wumbo Channels will allow large routing nodes to support much higher daily traffic .

Multi path payment

Multi path payment (MPP) It's a major improvement , Will greatly reduce the fragmentation of network liquidity . By allowing multiple paths instead of just one path to pay , Neither sender nor receiver has to worry about their channel capacity .

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

Under the chain swap

allow LN Channel from bitcoin blockchain to offline LN Channel chain transfer to refill . Interchain exchange results from atomic exchange , Its functions are similar .

The watchtower (Watchtowers)

The watchtower (Watchtowers) It's a third-party lightning node , It can detect whether a dishonest party is trying to steal money , Then broadcast fair trade , Send the money back to the honest side , Even if the node is offline . If a customer's node is offline or unable to respond to a violation , The watchtower will be the second line of defense , Dealing with malicious or unexpected violations , Provide greater security for channel funds .

Improvement of user experience

By allowing users to run their own without code LN node , image Umbrel、Casa or Lightning Labs Companies like this use LN The terminal greatly increases the network usability of ordinary users . image Phoenix or Breez In this way LN Native wallets have also helped thousands of new users join just with their mobile phones LN.

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

LN Ecosystem Overview

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

LN The ecosystem is very diverse , From podcasting monetization and micropayment to popular mobile cash rebate applications , Such as Fold And its famous Spin Wheel. Besides ,LN There's a huge potential for Ecology , That is to subvert the huge remittance market .

Strike Is a simple application , Allow anyone to use the lightning network with a dollar bank account . It is worth noting that ,Strike Make sending payment through lightning network as simple as scanning QR code , No need to download / Synchronization node , You don't even need to know what bitcoin is .Strike And other companies have the ambition to break the traditional payment model , But the fees of this payment mode can be as high as the transaction scale 20%.

Micropayment is the original vision of lightning network . By allowing people to make very small payments , A new economic model may emerge , Payment will be used as often as SMS . adopt Tippin.me stay Twitter To earn tips on the Internet , Or by Sphinx Streaming your favorite Podcasts , All of these help creators monetize their content . So are games and personal information LN Emerging use cases for , And a number of companies are trying to innovate .

LiFi: Smoke screen is also a competitive alternative ?

Since last summer , A lot of financial innovation takes place in DeFi in , Many people are trying to oppose DeFi And bitcoin . However ,DeFi And bitcoin should not be opposed . contrary , They both share the same values , Such as decentralization , This makes them more similar in their ultimate goal , Not different . Some would even say that bitcoin was the first DeFi application .

If we accept that , Then we can do it without any preconceptions , Begin to pay close attention to DeFi A whole new world of : Lightning Finance (LiFi). The word is written by E Elisabeth Stark In the lightning lab (Lightning Labs.) For the first time .

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

Pool It's the recent reawakening of people's awareness of LiFi An innovation of interest . But in the next few months , One thing you should pay attention to is support Pool The type of infrastructure : Shadow chain (Shadowchains).

Ryan Gentry stay LN Markets Newsletter It's the best explanation in the world , He said :

「 Shadow chain is a cool new structure . in my opinion , The sidechain didn't take off on bitcoin , Because they require users to give up regulation of their tokens , Give it to a team of verifiers , And the verifier may not return the token to them . Shadow chains are like side chains , You can keep custody of your money , And have the opportunity to verify every transaction involving your money , Instead of trusting a set of external verifiers . For application developers , Shadow chain gives you an Ethereum account model to develop , But it's really bitcoin .」

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

If that vision is realized , So the lightning network will be directly compatible with the existing decentralized exchanges and others DeFi Applications for 「 competition 」. However , The advantages of the shadow chain have yet to be proved , and Pool Our success will give us an indication .

Pool yes Lightning Labs Team oriented LiFi Our flagship service , It's a way for bitcoin holders to generate unmanaged benefits on their bitcoin Holdings , Not through BlockFi Such a trustee lends bitcoin or turns it into WBTC Conduct DeFi Income farming .

By using the concept of shadow chain ,Lighting Labs Effectively established a bitcoin liquidity market , So as to solve the liquidity problem of inflow . The so-called inflow liquidity problem refers to , Enable LN In the wallet , Users have the ability to send bitcoin over lightning networks ( We call it outflow liquidity ), But bitcoin can't be received through this channel yet .

「Pool Make a market for liquidity inflows , So anyone who wants to receive tokens on lightning ( new user 、 merchants 、 Exchange, etc ) You can buy channels from a variety of capital providers .」

The definition of shadow chain : Shadow chain is an unmanaged smart contract system that can be used on the basic bitcoin blockchain . Usually , If the complexity of the state transition logic of the smart contract system cannot be fully expressed in the basic bitcoin script , People will choose the shadow chain . Shadow chain allows application designers to use bitcoin blockchain for anti censorship settlement , At the same time, the more complex parts of the application are integrated ( state 、 Logic, etc. ) Push out of the chain . Users can pass through 「 promote 」 their UTXO To a higher level 「 Shadow chain 」 To join the shadow chain . The upgrade process requires the user to lock and release at one time 、 Multi signature output (2- 2) Invest money in , So as to strengthen the user and the shadow chain coordinator ( The coordinator here is Pool/Lightning Labs) Cooperation between .

Shadow Chain Verification for UTXO A subset of a set (Pool Account ) Modification of , The auctioneer acts as a block proposer to extend the chain . State transitions are performed by participating new blocks ( Auction lots ) People who verify and accept . Newer customers are even able to audit the previous history of the system , To ensure normal operation .

With the execution of each batch on the chain , Participants in the auction get interest rates for each block , In fact, it's the current capital lease rate on the lightning network . This new type of financial product is called LCL.

Lightning capital leasing (LCL) Effectively borrowed from different backgrounds , Created a new type of contract , It's a cross between traditional Internet peer-to-peer protocols and bonds .LCLs It's low risk , Because the seller or the lessor always has full control over the allocated capital . therefore , Businesses don't need to invest a lot of money to get the inflow of liquidity , And wallet developers will significantly reduce their high customer acquisition costs , Because they only have to pay part of the money allocated to new users . In order to get to know more about Pool The potential of , We recommend reading Pool Technical white paper .

since Pool Since the launch , There has been more than 54.3 individual BTC Borrowed , The average annual interest rate is about 8.12%, Is much higher than Nexo or BlockFi The average rate of return of an alternative to trusteeship .

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

obviously , We can expect , As the market matures , The yield of the pool tends to be lower than a certain APY, So as to effectively create bitcoin's first risk-free rate of return . We can't underestimate the importance of the financial credibility of the bitcoin . Risk free rate of return is important , Because all opportunities are evaluated according to it .

It's hard to imagine investors ignoring bitcoin's yield curve , With more than 17 Trillions of dollars in negative yield bonds , It represents the real risk-free interest rate ( because LCL There is no possibility of default ).

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

Besides , Another necessary comparison is the use of Pool Instead of the opportunity cost of running your own node . Although the only data we have available is 2019 Year of , But we think market conditions are relatively similar .BitMex Research The figure of 2 Show , The average return rate of a routing node is less than 1%.

The emergence of a new economy

As an extended solution for bitcoin , Lightning networks seem increasingly ready for mass adoption . since 2018 Since its launch in , With the help of a solid community of highly driven developers , The network has been improved by a variety of advanced technologies , It has greatly improved its trading capacity and liquidity management . A number of companies have also made significant improvements in the user experience , Make it easier for everyone to join the network . Although to achieve and DeFi Same level of user experience , There is still a long way to go .

LN It's a dynamic ecosystem of innovative companies , These companies are trying to build new payment channels , Subversive image Visa And giants like MasterCard , It is also conducive to the emergence of a new streaming media economy dominated by micro profit and micro payment , And considering decentralization and user privacy . From personal information to micro profits and games ,LN Areas of possibility seem to be limited only by the ambition of the founders .

By solving the inflow liquidity problem and creating a bitcoin liquidity market ,Pool Ready to push Lightning Adoption of , And allow bitcoin to LN The effective allocation of capital . It's a revolution to earn risk-free bitcoin's original yield in an unmanaged way . As a new financial product , Lightning capital leasing (LCL) Is paving the way for the emergence of a new financial system , Behind it is the strongest currency ever known . However ,Pool、 even to the extent that LiFi All need to bring different incentives to the lightning network , To make it sustainable .

Blockchain 「 Impossible Triangle 」 The end of ?

 On bitcoin DeFi: Lightning network finance LiFi Bring a new encryption economy ?

In the context of rising public blockchain costs , Bet No 2 Layers are the no problem choice . But the real problem is , Which one to choose ? For this question , When it comes to bitcoin , Compared to other known solutions ,LN There are clear advantages . Although the trade-offs associated with its use can be overcome , but LN The inherent properties of , From the power of bitcoin , Can't be replicated elsewhere at the same level of efficiency . With most people in the bitcoin community getting used to it now 「 Rigidity of agreement 」 Ideas , And be content with 「 Anti censorship 、 De centralization 、 Value storage 」 That's what I'm saying , By focusing on scalability , Lightning networks could be blockchains 「 Impossible Triangle 」 The perfect solution .

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