Lightning Payment Channel Marketplaces: A Bitcoin Business Opportunity

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There are already several platforms that offer their users the possibility of buying and selling payment channels of the Bitcoin Lightning network. These types of tools are also known as pools or liquidity reserves.

The main purpose of these liquidity reserves in the Lightning Network (LN) is to provide its users with access to payment channels which, in turn, allow transactions with bitcoin in a more fluid way.

The platform that added this option most recently is Amboss, which announced on April 26 the launch of Magma, its Lightning network payment channel marketplace.


Lightning Payment Channel Marketplaces: A Bitcoin Business Opportunity

The main requirement that Amboss users have to make use of the Magma market is operate an own LN node and have at least one active payment channel.

Beyond that, it is just a matter of accessing the platform and choosing the payment channel that suits your needs, in the case of being a buyer, or offering to open a channel under the conditions that you consider most convenient.

Magma Interface
This is what the interface of Magma looks like, the market for payment channels of the Lightning network of the Amboss platform. Source: both.

both alleges which, in the interests of offering the highest possible level of security and liquidity in its payment channel market, has a couple of strategies in place. The first is the use of receipts HODL. These types of receipts on the Lightning Network are not charged immediatelybut before certain conditions must be met in a given period of time.

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Lightning Payment Channel Marketplaces: A Bitcoin Business Opportunity

The seller will only receive the satoshis corresponding to the payment by the buyer if he opens the payment channel on time under the agreed conditions.

The other strategy of Amboss consists of a reputation system that seeks, on the one hand, to reward those who fully comply with their commitments and responsibilities on the platform and, on the other, to penalize those who do not. To this end, Both undertakes to monitor commission adjustments in the channels to ensure that they are complying with the agreement.

If there are cases in which a user repeatedly breaches the agreements with his counterparty or commits any other type of transgression on the payment channel trading platform, this you will be banned indefinitely from using Magma.

Other Alternatives for Buying and Selling Payment Channels on the Bitcoin Lightning Network

Before the arrival of Amboss and Magma, there were already other markets where you could buy and sell Bitcoin Lightning network payment channels. One of them is managed by Lightning Labs, the same ones in charge of developing the LN implementation of the same name.

Lightning Pool is the name of the protocol that, like Magma by Amboss, facilitates the meeting between users who need incoming or outgoing liquidity (receive or send payments) and those who offer it.

To be a Lightning Pool user it is essential to manage a Lightning node with the LND client, developed by Lightning Labs. One detail that is important to note is that, unlike Magma, Pool does not have a very friendly user interface or GUI. In fact, it is recommended that those who want to use this tool are users familiar with lines of programming code.

A couple of Pool’s advantages over Magma is that, first, Lightning Labs doesn’t police its users as much as Amboss does, albeit for their safety. Another advantage is that it does not require commissions for the use of this service, while Amboss demands 10% of earnings from its users, unless they are subscribed to the platform.

Blockstream, the company in charge of the development of the Core Lightning client (formerly known as c-lightning) of LN, also offers a liquidity reserve for the Bitcoin micropayment network. This is named Lightning Ads and its technology is based on the dual anchoring protocol developed by them.

Just like Lightning Pool from Lightning Labs, Lightning Ads payment channel marketplace does not have a beautiful user interface visual or intuitive to use. However, those used to using lines of code may feel comfortable with this tool.

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