Lightning Labs wants to revolutionize the Bitcoin Lightning Network. Users should receive returns for BTC through Lightning Finacne (LiFi) – but how?
Some believe that the Bitcoin Lightning Network is key to the scaling problem of the world’s largest cryptocurrency
Many different companies are working to finally make the Lightning Network accessible to the masses.
Nevertheless, no real breakthrough has been achieved so far and many see the Bitcoin Lightning network as a failure. Even so, according to DeFi , the network reached Pulsenew highs. A new update should fundamentally revolutionize the Lightning Network.
Lightning Labs announced on November 2ndthat they will publish a peer-to-peer marketplace without custodial for the Bitcoin Lightning network . This new service will enable users of the Lightning Network to make their Bitcoin available for payment channels in order to generate returns.
Various companies and service providers can then fall back on this liquidity if necessary in order to process payments on the Lightning network.
Has Bitcoin Lightning Network’s Biggest Problem Solved?
Efficient capital allocation is one of the most common criticisms of using the Lightning network. Existing Lightning channel operators often have no information about who can and wants to use their channel. This makes it difficult to allocate liquidity where it is needed. Conversely, users of the Bitcoin scaling solution had no way of signaling that they needed liquidity.
According to the press release from Lightning Labs, the new “Lightning Pool” will bring both sides together in a single market. This means that both parties should be able to interact in a market at the same time without losing control of their coins.
Companies or users can thus manage multiple channels and buy liquidity in the marketplace if they need to replenish their channel reserves for forwarding transactions.
On the other side of this transaction, Lightning Network users can use their unused Bitcoin by making them available as liquidity in the pool. In this way, they lend their Bitcoin to other users and receive a reward in return.
LiFi an alternative to decentralized finance
Lightning Labs is marketing the new service as an alternative to Decentralized Finance (DeFi) products. With Lightning Finance (LiFi) it should be possible to generate returns with your Bitcoin holdings without first having to tokenize BTC in WBTC, as with DeFi BTC . Said about this the developers of the Lightning Network:
The pool is still in the early stages of development and is not like DeFi. We don’t want them to deposit a million US dollars from day one as there are still some risks.