The Lightning Network’s Lightning Network Rate (Liner), according to Amboss, simplifies this process by giving key insights on yield opportunities.

Lightning is a second layer payment network that allows for faster and cheaper bitcoin ( BTC ) transactions. Users must first commit bitcoin to a payment method to gain liquidity, the ability to receive and send payments.

Read more: A new layer 2 bitcoin protocol aims to solve Lightning’s “Inbound Liquidity” problem, Ark

The network’s service providers will open payment channels, commit funds and lease temporary excess liquidity for a fee to users, thus generating a yield on their committed money.

Service provider nodes can maximize their yield by matching with nodes that are capable of increasing transaction volume, providing round-the clock availability (offline nodes will not route payments), and maintaining liquidity for a specified time period. Amboss launched its liquidity marketplace Magma last year. This matching process is already possible. Now, the firm claims that Liner will become the benchmark rate to measure bitcoin returns on invested capital.

In an interview with CoinDesk, Jesse Shrader said that “Liner allows you to earn money without giving up your custody.” “People have given their bitcoins to Celsius and BlockFi, and they now have nothing in return. We are promising them yields on bitcoin. Lightning is the answer to those who made the mistake of relying on another platform to store their bitcoin. ”

Amboss did not invent the liquidity market, nor the benchmark rate. Lightning Labs, a lightning infrastructure company, launched Lightning Pool almost two years prior to Amboss. Lightning Pool aggregates liquidity supply and demand, allowing buyers submit bids via sealed-bid auctions, while also generating an “current lease rate” similar to Liner.

According to the book Reckless: The History Of Cryptocurrency Rates by author and investor Jonathan Bier, Lightning Pool had twice as much volume in November 2022. The metrics of each platform at the time of reporting show a lifetime of 110 BTC from launch for Magma, which went live early in 2022. Lightning Pool’s annual of 10 BTC (which does not display lifetime volume) is just below.

“We operate an online liquidity marketplace.” Shrader said that if you wanted to buy a TV channel, you could go and purchase it from anyone who has an offer posted. “That’s just one part of it. Just provisioning this liquid. The person who provides the liquidity gets some return out of it.

By adding Liner to Magma, liquidity providers can determine if committing capital is worth it. The cost of leasing channel capability will also be available to buyers of liquidity. LINER Yield is aimed at liquidity providers, while LINER Cost targets those who are looking for liquidity.

Magma’s current yields range from 2% to 3.0%. This is what Shrader refers to as “self-custodial returns,” which means that the only way these yields are generated is by providing liquidity, without bitcoins changing hands.

Update (Jun.6, 2023, 21:02 UTC): Adds recent metrics for Magma and Lightning Pool. Updated metrics for Magma Pool and Lightning Pool.