Lightning Network Ecosystem Panorama: Current Status and Future Vision

Source: Byte Yuan CKB

In the previous article "Main Dilemmas Currently Facing Lightning Network (2)", we discussed the many challenges facing the Lightning Network. However, with the continuous advancement of technology and the continuous efforts of the community, these difficulties will eventually be overcome one by one, and the Lightning Network will be closer to the goal of large-scale adoption.

In fact, after several years of vigorous development, the infrastructure and ecological applications of the Bitcoin Lightning Network have begun to take shape. Today, let us take stock of the current ecology and usage scenarios of the Bitcoin Lightning Network, and imagine the innovative application scenarios that may emerge in the future.

Infrastructure

Lightning Network Client Implementation

Currently, the main client implementations of the Bitcoin Lightning Network include LND developed by Lightning Labs, Eclair developed by ACINQ, and CLN developed by Blockstream. Among them, LND occupies the largest market share and has supported Taproot Assets, which means that in addition to BTC, other tokens (such as stablecoins) are also officially supported on the Bitcoin Lightning Network.

It is worth mentioning that the Lightning Network can also be implemented on other blockchains. For example, Cardano is developing Hydra, while Nervos CKB has launched a full beta version of Fiber Network, which is compatible with the Bitcoin Lightning Network and supports the RGB++ protocol, providing fast, low-cost and decentralized multi-currency payments and peer-to-peer transactions for RGB++ assets (including stablecoins).

Wallets

Wallets compatible with the Lightning Network have already blossomed. Custodial wallets mainly include Satoshi, Blink, Current, etc., and non-custodial wallets include Phoenix, Blue Wallet, Breez, etc. It is worth looking forward to that JoyID, a non-custodial wallet based on Passkey that does not require mnemonics and passwords, is also testing the Bitcoin Lightning Network and is expected to be officially launched soon.

In addition to software wallets, mainstream hardware wallets such as Ledger, Trezor, OneKey, etc. have also joined the ranks of supporting the Bitcoin Lightning Network.

Trading Platforms

Mainstream centralized exchanges (CEX), such as Binance, Bitfinex, OKEX, etc., have already supported the deposit and withdrawal business of the Bitcoin Lightning Network.

At the same time, there are also many decentralized exchanges (DEX) that support or are based on the Bitcoin Lightning Network, including LN Exchange, Hydranet DEX, LN Markets, etc. In addition, UTXOSwap, the first DEX based on RGB++ Layer, also revealed in its roadmap that it will support the Lightning Network.

LSP (Lightning Network Service Provider)

LSP provides users with a stable connection to the Lightning Network, simplified channel management, and liquidity support. For example, Breez will provide users with 1 million satoshis of liquidity after installing the app, which will be placed in the channel automatically opened between the Breez center and the user. Other well-known LSPs include LightningTo.Me, LNBIG.com, Thor, etc.

Statistics and Analysis

Websites that provide data statistics and analysis services for the Lightning Network include mempool, 1ML, etc., which provide valuable network insights for users and developers.

Hardware equipment, node management software, Watchtower, API, etc.

There are certain thresholds for running Lightning Network nodes. In order to lower the hardware configuration threshold and maintenance threshold, many teams in the Bitcoin ecosystem have launched plug-and-play hardware devices, such as Umbrel, Start 9 Embassy, ​​Nodl, Fi5Box, etc. Among them, Fi5Box's hardware box not only supports Bitcoin Lightning Network, but also supports running nodes of other Lightning Networks (such as Fiber Network based on CKB).

These Lightning Network hardware boxes often have built-in customized OS. In addition, there are some general third-party OS in the Bitcoin ecosystem to help users manage nodes, such as myNode.

In addition, Lightning Network nodes also need to stay online all the time and monitor on-chain activities around the clock. If they are offline, the funds in their channels may be lost or stolen. In order to protect the security of funds, some nodes outsource the protection and monitoring of payment channels to Watchtower. Watchtower is a third-party Lightning Network node that can detect whether a dishonest party is trying to steal funds, and then broadcast the message of a just transaction and send the funds back to the honest party (even if the honest node is offline). ZapTower, The Eye of Satoshi, etc. provide Watchtower services.

Lightning Network API greatly facilitates the access of games or applications to the Lightning Network, without the need for developers to run and maintain Lightning Network nodes themselves. Currently, ZBD, IBEX, Opennode, River, etc. provide Lightning Network API services.

Eco-applications

With the development of the Lightning Network, its application scenarios have expanded to finance, games, rewards/cashback, crowdfunding, P2P markets, podcasts/streaming media, social applications and other fields, and there are multiple projects in each field making innovative attempts.

Neobank

Neobank refers to a purely Internet-operated financial technology company with similar functions to traditional banks. They only provide online financial services and have no offline physical branches. Neobanks that provide lightning network services include Strike, Bitnob, Cash App, Chivo, etc.

Games

The combination of the lightning network and P2E (Play to Earn) games allows anyone with an Internet connection to earn BTC by playing games. Representative Bitcoin game companies include ZBD, THNDR, Satoshi's Games, etc. Among them:

• ZBD's payment solution provides a plug-and-play SDK and a fully customizable API, making it convenient for other game applications to use ZBD's technology to directly access the lightning network in the application. It is reported that ZBD has been integrated into nearly 250 games and applications.

• THNDR’s mission is to “bring Bitcoin to the world through mobile games”. The games it has released include Bitcoin card game Club Bitcoin: Solitaire, racing game Turbo 84, and snake game Bitcoin Snake.

• Satoshi’s Games is a game platform powered by the Lightning Network. It has launched many Bitcoin P2E games, including the multiplayer online battle royale shooting chain game Lightnite.

Rewards/Cashback

In this field, the more representative projects include Slice, sMiles, Joltz, Fold, etc. Among them:

• The browser plug-in launched by Slice allows users to get points rewards by browsing ads, and these points can be exchanged for BTC.

• sMiles is a multi-functional platform where users can earn BTC rewards through sports, shopping, playing games, participating in questionnaires, etc.

• Both Joltz and Fold provide shopping cashback services, and the unique thing is that the cashback is issued in the form of BTC.

Crowdfunding

Platforms that use the Bitcoin Lightning Network to participate in crowdfunding include Geyser, OpenSats, etc., which provide new funding channels for innovative projects and public welfare.

P2P Market

In the previous article, we mentioned that the Lightning Network has unparalleled advantages over other solutions in the field of encrypted payments and is an important foundation for realizing the P2P economy. In a P2P economy, people can trade autonomously in a peer-to-peer manner without the involvement/intervention of middlemen.

Currently, P2P markets built on the Bitcoin Lightning Network include HODL HODL, Scarce City, Microlancer.io, etc. Among them, HODL HODL is a P2P Bitcoin trading platform that also provides P2P lending services; Scarce City is a P2P art trading platform; and Microlancer.io is a P2P micro-task bounty platform.

Podcasts/Streaming

Podcasts/streaming platforms that use the Bitcoin Lightning Network to provide incentives for creators include Fountain, Wavlake, SHOCKNET, etc. These platforms provide new monetization channels for content creators, and also bring users a richer and more diverse content experience.

Social

The developer of the decentralized social protocol Nostr, fiatjaf, is also the developer of the Bitcoin Lightning Network, so Nostr natively supports the Lightning Network. Applications based on Nostr, such as Current, Damus, and Flycat, are all connected to the Bitcoin Lightning Network, allowing users to directly reward creators in the application and promote the healthy development of the content ecosystem.

Of course, the use scenarios of the Lightning Network are far more than this. On the Lightning Network+ website, we can see the innovative applications of the Lightning Network in art, books, education, fashion, catering, gifts and more.

Imagination of Lightning Network's Future Application Scenarios

Lightning Network will have broader application prospects in the future due to its advantages such as high throughput, low latency, low cost and privacy protection. Below, let's imagine 2 possible innovative scenarios:

Stream Payment

Stream payment is an emerging payment model that allows users to make accurate real-time payments based on time or usage. Traditional payment systems are difficult to implement true stream payment due to limitations such as high handling fees and long settlement time. As a low-cost, high-speed payment solution, Lightning Network has the potential to completely change the way stream payment is implemented.

Let's imagine a multi-functional streaming platform called "Stream Tube". Users do not need to register, KYC, bind bank cards, or pay monthly subscriptions. As long as they connect to their wallets, they can pay for watching by the second. For example, if a 2-hour movie is watched and there is a boring plot in the middle, the user skips it directly, and in the end he only needs to pay for the actual viewing time. For the platform, it can dynamically adjust the price based on factors such as server load, time period, user demand, and content popularity. In terms of revenue distribution, automatic sharing can also be achieved, such as real-time revenue distribution between content copyright holders, platforms, and creators.

Through such a design, the Stream Tube platform has created a highly flexible, fair, and efficient service ecosystem. It not only provides users with a more precise and economical way to use services, but also provides service providers and creators with a more direct and timely revenue model. This streaming payment model based on the Lightning Network has the potential to reshape the business models of multiple industries and bring new possibilities to the digital economy.

IoT Payment

With the popularity of IoT devices, small and micro transactions between devices will appear in large numbers in the future. However, according to current laws and regulations, it is impossible for these IoT devices to open bank accounts separately. The permissionless, high-throughput, low-latency, and low-cost Lightning Network can be the ideal payment infrastructure for these IoT devices.

Take cars as an example. Recently, Elon Musk demonstrated the driverless taxi Robotaxi at the "We, Robot" event and revealed that the vehicle is expected to start production in 2026. This shows that the real driverless era may come faster than many people think. Imagine that in a city full of driverless cars, each car is connected to the Lightning Network, has its own account and balance, and can send and receive funds. You are sitting in a driverless taxi. Because you are in a hurry, you have to overtake all the way. Then you can pay every car in front of you to let them make way for you and let you go all the way. And those passengers who are not in a hurry also get some compensation because they give way to you. The driverless car takes you to your destination and makes money. It can drive to a nearby charging station to charge and automatically pay the fee to the charging station.

From the perspective of urban management, the entire transportation network can achieve decentralized market scheduling without going through the central brain of the smart city. In those congested sections and time periods, passengers in a hurry pay higher travel costs than others, which will encourage them to travel in peak hours or choose other routes in the future, thereby achieving self-regulation of traffic flow.

Conclusion

The development of the Lightning Network is like a snowball. From the initial concept of payment channels to the prosperous ecology covering games, social networking, streaming media and other fields today, its potential is gradually emerging. We have seen that the Lightning Network has not only made significant progress in solving the problem of Bitcoin's expansion, but also promoted the entire crypto economy to develop in a more efficient and inclusive direction.

Looking to the future, we can expect the Lightning Network to play a role in more areas. Whether it is full-chain games, streaming payments, or IoT payments, the Lightning Network has the potential to become an important infrastructure. These innovations will not only change the way we pay, but may also reshape the entire digital economy.

References:

• https://river.com/learn/files/river-lightning-report-2023.pdf

• https://lightningnetwork.plus/market