Home » Lightning Pool enables earning of Yield from Bitcoin

Lightning Pool enables earning of Yield from Bitcoin

by Carolina Lynch
Lightning Pool

Lightning Labs has created software for the Bitcoin Lightning Network which will allow users to send and receive money and earn yields out of it.

The new tool so released by it will endow the users to trade BTC funds locked up in the network and go the DeFi way. 

About Lightning Labs

Lightning Labs develops software that empowers the lightning Network. Its lightning systems are open-source, secure, and scalable which allow users to send and receive money more efficiently than ever before. It also offers a series of non-custodial and verifiable lightning-based financial services thereby bridging the gap between open-source software and next-generation bitcoin software. This leads to the cheap and rapid sending of Bitcoin which was quite unimaginable a few years ago. 

The problem of lack of information

Lightning Labs made an announcement that it is creating a way that would allow users to trade funds that are locked up in the Network. At present, the entire set of functionalities is based on a concept called Lightning nodes. They are systems that coordinate the processing of Bitcoin transactions on the Lightning network. There is a dearth of information making it impossible to determine how to fund these transactions. Even the node operators have no inkling about how to notify the nodes about the need for liquidity. 

Lightning Labs comes up with a solution

Understanding that this is a problem that needed solving, Lighting Labs came up with a Lightning pool which is a marketplace enabling node operators to buy all the liquidity they need to run the network. As a result, newer ways are generated on how to trade and make money out of it apart from seamless operation runs within the network. With the help of the Pool’s auction function, nodes can send liquidity to those portions of the network that need it and earn money while doing so. Those nodes that receive liquidity and use the Auction function to understand which channels are the best to buy from.

Concept of LiFi

On paper, this concept looks like an attractive proposition and will make it easy for people to earn from the network. Lighting Labs said:

“Businesses and node operators can use Pool to streamline their channel management processes and focus on acquiring customers instead of access to liquidity.” It also makes the network “more reliable, resilient, and efficient for all participants.”

Like DeFi which is decentralized and non-custodial, this is called ‘LiFi’ implying that people get paid for providing liquidity to exchanges and lending protocols. On Li-Fi the pool sellers will be able to earn yields on bitcoin without any reliance on a third-party for the custody of their funds. 

“This yield is earned from buyers on Pool willing to pay a premium for access to new capital on Lightning without counterparty risk.”


The information discussed by The Coin Magazine is not financial advice. This is for educational and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Do your due diligence and rating before making any investments and consult your financial advisor. The researched information presented we believe to be correct and accurate however there is no guarantee or warranty as to the accuracy, timeliness, completeness. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright The Coin Magazine All rights reserved.

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