LN Alliance to Unite Developers for Bitcoin Ecosystem Advancement

Infrastructure company Lnfi aims to accelerate the development of the Lightning Network (LN) by leveraging new protocols such as Taproot Assets and Nostr. This topic was discussed during a session organized by UTXO Management.    

As part of the initiative, representatives from the LN Alliance reached out to industry partners and developers. 

“Today, the entire Lightning ecosystem is quite fragmented. There are all sorts of standards and protocols. Bitcoin, LN, and Nostr projects are based on these standards, so hopefully, we can move forward as a joint community,” stated a developer from Lnfi under the pseudonym Darius. 

By raising awareness of existing tools and protocols, alliance members aim to eliminate “duplication of efforts,” allowing developers to use existing products rather than creating exact replicas. 

LN Link is one of the standards being developed and promoted by Lnfi. Created as an extension of Nostr Wallet Connect (NWC), it enables Bitcoin applications to interact with the Taproot Assets protocol. 

Preparing Taproot

One of the main focuses of the LN Alliance will be the development of Taproot Assets. Developed by Lightning Labs, the protocol is designed for issuing assets on the Bitcoin blockchain and within the LN. In October 2023, developers released an alpha version of the project for the mainnet of the first cryptocurrency.

Ryan Gentry, Head of Business Development at Lightning Labs, stated at a recent meeting that since the protocol’s launch, over 150,000 tokens have been created. There are plans to integrate Taproot Assets with LN in the near future, enhancing usability and speed.

Focusing on the evolving Lightning Network infrastructure, Voltage CEO Graham Krizek highlighted the importance of an accessible and reliable network, especially for the potential integration of “stablecoins”:

“Stablecoins on Lightning are a powerful thing that will interest far more people worldwide than the network attracts today.” 

He added that it is “critically important” to ensure the protocol’s ease of use for widespread adoption of the technology. 

Joltz co-founder Linden Stark shared practical steps being taken to simplify user interaction with Lightning. The project team is implementing “zero-confirmation” channels and “submarine swaps” to facilitate transactions between different assets and layers of the ecosystem. 

FewSats founder, known as Jordy, sees the potential of the Lightning Network as a “network of networks” and evaluates the possibility of using Taproot assets as a means of payment.  

Compatibility

In recent years, LN has established itself as a “connecting layer” between other parts of the Bitcoin ecosystem. 

“In the next couple of years, we will see a trend towards creating Lightning exchange interface services, similar to how Boltz enables the Aqua wallet. Users with assets on the Liquid Network can send and receive funds in LN through this solution,” noted Gentry. 

Other participants in the discussion also expressed confidence that the Lightning Network will become a compatibility layer, connecting users and services of other supported networks.

The combination of NWC and Taproot will help simplify interaction with protocols, allowing transactions with various types of assets. 

“You will be able to pay a bill seamlessly, even if the recipient wants a different asset,” explained the founder of FewSats. 

Financial Aspect

For the initiative’s continued success, LN Alliance members discussed ways to incentivize infrastructure development. One of the most common methods of benefiting from LN’s economic activity is revenue from routing fees or channel rentals.

Amboss founder Jesse Schrader explained that historically, the yield from payment routing has been modest. However, Taproot assets are expected to generate a large volume of transactions, thereby increasing the use of scarce liquidity in the network. 

Amboss’s efforts with the Magma marketplace and the Hydro tool aim to simplify liquidity management for sellers and increase profitability by boosting the volume of payments in the network.

The Head of Business Development at Lightning Labs noted that expanding the use of Taproot will benefit even those who do not interact with such assets directly.

According to 1ml, at the time of writing, the number of nodes in LN is 13,569 with 51,484 channels. Data from DeFi Llama indicates that the volume of funds locked in the micropayment protocol is $311 million. 

In October 2023, Bitcoin Core developer Antoine Riard left the LN team, citing a critical vulnerability. He urged his former colleagues to “wake up” and address security issues.