Lightning Network Gets a Marketplace for Payment Channel Liquidity

Nov 2, 2020 at 16:01 UTCUpdated Nov 2, 2020 at 16:51 UTC.The team behind the Bitcoin Lightning Network's leading software implementation is launching a marketplace for Lightning users to lease liquidity for payments on the second-layer network.

Today, Lightning Labs announced the release of Pool, "a non-custodial, peer-to-peer marketplace for Lightning node operators to buy and sell access to liquidity," according to a press release.

The service will allow Lightning Network users to lend out bitcoin in payment channels in return for yield.

Businesses and services providers can then draw on this liquidity when needed to manage Lightning Network payment flows.

"Efficient capital allocation is one of the most widely felt pain points when using the Lightning Network. Existing node operators do not have access to pricing signals to help determine where in the network their outbound liquidity should be allocated, and new node operators have no way to signal that they need new inbound liquidity," the press release states.

Pool provides a marketplace for Lightning Network liquidity.

Bitcoin's Lightning Network offers cheaper, faster payments than Bitcoin's primary network by offloading these payments onto a "Second layer".

Lightning manages payments through two-way payment channels, where either side holds a certain amount of the funds locked up in a channel.

On the other side of this transaction, Lightning Network node operators can employ their idle bitcoin by offering it up as liquidity on Pool."Pool adds market pricing signals to the system so that individuals know where capital is needed. Someone could go on the market and say, 'I want 1 BTC for 1 month and I'll pay 3%,'" Lightning Labs CTO Olaoluwa Osuntokun told CoinDesk.

Liquidity providers will receive fees up-front on their Pool account, but Lightning Labs hopes to implement a "Per block interest rate," wherein interest is paid out instantly to a provider's Lightning wallet roughly every ten minutes with each new Bitcoin block.