Here comes Lightning Pool, a non-custodial P2P marketplace for Lightning Network channels intended for LN node operators.
This was announced by Lightning Labs, revealing that the pool will allow people to buy and sell liquidity by exchanging channels, or earn profits in BTC.
Announcing Lightning Pool, a non-custodial marketplace to buy and sell #bitcoin liquidity on Lightning.
With Pool, users can trade channels, making it easy to get access to liquidity or earn a bitcoin-native yield. 💱
Learn more and start trading today:https://t.co/tOe7xs6Rac
— Lightning Labs⚡️ (@lightning) November 2, 2020
With the new pool, LN node operators can simplify channel management and focus on serving their customers. In addition, a more efficient distribution of capital will improve the network as a whole, making it more reliable and resilient for all.
Liquidity is one of the weakest points of the LN network today, and efficient capital allocation takes time and effort. Over time, OTC services have already been created for the purchase of incoming liquidity, but they are centralized.
This on the one hand confirms the growing market demand for liquidity providers on the LN, but on the other hand, requires a decentralized tool to manage this market.
The aim is to create a scalable solution to meet this demand and create a strong, bilateral market for buyers and sellers.
Lightning Network’s liquidity marketplace
With Lightning Pool, node operators can be paid for opening new channels and providing incoming liquidity, for example to respond promptly and efficiently to the peaks in demand that occasionally occur on the LN.
In addition, new nodes that currently have no way of knowing where to place their capital efficiently or whether they need incoming liquidity can do so using the new P2P marketplace.
Lightning Pool also provides a reference rate of return against which nodes can make economic calculations, and measure whether they are allocating their capital efficiently.
As the system is based on the decentralized blockchain of Bitcoin, it is completely trustless and non-custodial, with returns being paid in BTC.
With the alpha version of the Mainnet launched yesterday, Lightning Pool is now open to all users running an active routing node. As it is an alpha version, it should still be considered a technology in the experimental phase.
This new solution clearly shows that the potential of LN goes far beyond simply providing fast, cheap and trustless transactions, as it enables the creation of true exchange platforms using native assets such as BTC and Lightning channels. The fact that these are decentralized, non-custodial, trustless and peer-to-peer tools makes this technology even more exciting.