Why are we optimistic about the Lightning Network? The reason is simple: it is easy to use!
Fast transactions, no congestion, and low costs. These advantages and the smooth user experience make me feel that the Lightning Network has unlimited prospects. I started paying attention to the Lightning Network in 2023. Against the background of the rise of the Bitcoin ecosystem, I personally think this is a track that cannot be ignored. Among them, @LnfiNetwork is the most representative.
Before introducing Lnfi, let me help you sort out some knowledge related to the Lightning Network.
What is the Lightning Network?
The Lightning Network was proposed as a second-layer solution for the Bitcoin blockchain. The original concept was proposed by Joseph Poon and Thaddeus Dryja in a white paper in 2015. This white paper describes a method for fast transactions by creating a peer-to-peer channel network, aiming to solve the scalability problem of the Bitcoin blockchain.
Simply put, it is like a highway built next to the native "road" of Bitcoin.
Why do we need Lightning Network?
The Bitcoin network processes every transaction and records it in the blockchain, which is secure but also slow and expensive because every time you spend money it has to be announced globally.How does the Lightning Network work?
You don't have to use the Bitcoin network every time to trade directly. Instead, you open a "payment channel" with the other party, which is like opening a small ledger for only the two of you to see.
In this channel, you can conduct countless transactions, and only when you decide to close the channel will the final transaction result (for example, you owe him 1 bitcoin and he owes you 0.5) be submitted to the Bitcoin network.
It's like you and a friend borrow money from each other and settle it all at once.What are the benefits?
Fast: Because there is no need to write to the blockchain every time, transactions are almost instant.
Low fees: numerous small transactions only count as the fee of one large transaction.
Scalability: The ability to process more transactions without requiring the Bitcoin blockchain itself to be upgraded.
Above we have a brief understanding of some concepts and principles of the Lightning Network. All along, the Lightning Network has been developed mainly as a convenient payment method, but with the development of technology and network upgrades, more possibilities have emerged on the Lightning Network.
Global distribution of Lightning Network Channels
What are Taproot Assets?
In October 2023, Lightning Labs released the v0.3.0 alpha version of the Taproot Assets protocol, which means that stablecoins and other assets can be built on the Bitcoin network from now on.
Taproot Assets is a meta-protocol on Bitcoin, similar to Ordinals, BRC-20, Runes, Atomicals, TAP, PIPE or RGB. It can handle fungible, semi-fungible and non-fungible tokens.
Taproot Assets is completely UTXO-based (just like Runes and PIPE), which means it integrates well with Bitcoin native technologies such as RGB, Lightning (especially), DLC, etc.
Taproot Assets is natively integrated with the Lightning Network. This means you can use Taproot transactions to start a Lightning channel (if you haven’t already, you will soon), and you can submit BTC and Taproot assets to a Lightning channel in a single Bitcoin transaction.
Taproot Assets are created on Bitcoin using Taproot transactions. Data is stored in the Taproot tree, and token metadata is stored on the creator's machine by default, and can then be optionally stored in Universe, an off-chain data repository/indexer (if desired).
Bitcoin's multi-asset era has given the Bitcoin ecosystem narrative a greater burst of imagination. Various Defi, Gamefi, Socialfi and even offline consumption scenarios based on stablecoins have gained fertile soil for growth with the support of the Lightning Network.
What is the Nostr Protocol?
Another thing that must be mentioned is the Nostr Protocol, which is an open, decentralized messaging protocol designed to create a censorship-resistant global social network.
Clients and relays: The Nostr network consists of user clients and relays. Users publish and receive information through clients, while relays are similar to message transfer stations, responsible for storing and forwarding information.
Encryption and security: Each user is authenticated through a public-private key pair. The content published by the user (called an event) needs to be signed with a private key, which ensures the authenticity of the information and the protection of user privacy.
Decentralization and censorship resistance: Because information is spread through multiple relays, no single relayer or service provider can control the entire network or a user’s data. This means that Nostr is inherently censorship-resistant because there is no central point that can be disabled to block the entire network.
User autonomy: Users can choose to connect to any relay and can change relays at any time. This enhances user control over data storage and access.
Although Nostr itself is not a blockchain technology and has nothing to do with the Lightning Network, both are committed to building a decentralized ecosystem. Its design and application scenarios allow for seamless integration with other decentralized technologies such as the Lightning Network, thereby creating a richer user experience and functionality.
After so much preparation above, it’s finally time to talk about the project I want to talk about today - Lnfi Network.
What does Lnfi Network do?
Lnfi Network aims to create a financialization layer by introducing LightningFi (Lightning Finance), which enables sending/receiving, issuing, distributing, raising funds, staking, locking, gifting and trading Taproot assets (an asset protocol issued on the Bitcoin blockchain) on the Lightning Network. This project combines Bitcoin, Lightning Network and Nostr to promote the application scenarios and popularization of Lightning Network.
Lnfi Network expands the use cases of Lightning Network by introducing a financialization layer
Lnfi Network’s predecessor was NostrAsset. I believe that old users who participated in the project in 2023 are already familiar with it. At that time, it created a brand-new fair launch method of staking lottery, which caused a lot of heat. However, due to various reasons, the heat did not continue. We will analyze this in detail later.
After more than a year of development, I see that Lnfietwork's route and products have become more and more perfect (if I hadn't seen that the project team has been building it seriously over the past year, I wouldn't dare to write about it when the price of the currency has fallen so much).
Product Line Introduction
Asset Management Platform
First of all, Lnfi Network is an asset issuance and management platform. Users can easily recharge, transfer, lock, and withdraw assets on the platform. Currently, the assets on it include
TREAT/TRICK: commonly known as double T, it is the first Taproot asset to be publicly issued. The two tokens are equivalent, with a total issuance of 210 million respectively and a total of 420 million. The distribution is as follows:
About 20% airdropped to the community
70% goes to further our ecosystem and community development, including Lightning Network, Taproot assets, and Nostr ecosystem grants.
The remaining 10% is allocated to the team
In addition, the team announced in March this year that in order to improve practicality and simplify management, 80% of the total supply of TREAT and TRICK tokens will be destroyed and replaced with new platform tokens. The specific token economics has not yet been released.
NOSTR: It is a meme token generated by fair lottery through fair staking of TREAT/TRICK, with a total of 21 million. This has caused great controversy because the name overlaps with the name of the Nostr protocol.
TNA: It is a token issued by partners. The total amount is 210 million. The project party has taken out a certain proportion and airdropped it to the community fairly through a staking lottery.
BURGER: A meme token on the Lightning Network, with a total of 210 million. All of them come from airdrops, and the unclaimed part is destroyed. Currently, there are about 130 million in circulation. Recently, Trump used Bitcoin to pay for hamburgers and it became popular. The Lnfi platform also airdropped to relevant eligible users.
LN Node
LN Node is a service that simplifies the setup and management of lightning nodes, requiring zero technical proficiency from the user. This enables individuals to maintain sovereignty over their assets and digital identities in the Lightning Network, thereby promoting wider adoption
Simply put, users can create their own lightning nodes through LN Node, realize self-custody of assets, and obtain mining income through the nodes.
LN Starter
LN Starter is the groundbreaking fair launch method I mentioned earlier. The entire distribution process is divided into three stages:
1. Participation stage: There are 12 launch pools. Each pool has its corresponding hexadecimal character. Users need to pledge designated assets (usually double T) into the selected launch pool and then wait for the lottery. (You can pledge multiple pools and allocate assets according to the actual pledge situation.
Select the launch pool to stake
2. Lottery stage: The lottery starts from the specified Bitcoin block number. For example, if the last digit of the hash of the current lottery block is "6", the emission pool corresponding to "6" is the winning pool, and the top 50 (by default) in the pool are the winners. If the pool wins again, the top 50 winners (i.e. 51-100) will be selected, and so on.
Lottery Stage
3. Receive rewards: After the draw is completed, winners can receive their rewards within the specified time.
LN Bridge
Through LN Bridge, the ERC20 standard USDT can be cross-chain to the Lightning Network.
Cross-chain
LN Exchange
The first order book exchange on the Lightning Network, supporting spot and perpetual contracts (under internal testing). It also supports escrow and sub-escrow for unified liquidity management
LN Exchange
Risks and opportunities
I have introduced so many products above, so let me talk about my views on some risks and opportunities in the Lightning Network track.
First of all, when Lnfi Network (then called NostrAesst) launched Double T and NOSTR in 2023, it had already caused a certain amount of heat. At that time, Double T broke through 1,700 sats, and NOSTR even broke through 10,000 sats. So why did the heat disappear later and the currency price fell to a terrible level?
I think the main reason is also obvious: lack of liquidity.
At that time, and even until now, the Lightning Network only supports peer-to-peer transactions, which greatly limits transaction efficiency. The reason why the price of the currency was so high at that time was partly due to the popularity of the Bitcoin ecosystem and partly due to the expectation of listing on an exchange. Although Binance and OY have expressed their support for the Lightning Network, the expected listing did not happen. Eventually, liquidity also dried up. I guess there are two reasons for the failure to be listed on an exchange.
The first is that the project owner did not have enough background and strength, and there was a lot of controversy over the name at the time;
The second reason I think is also the main reason is the limitation of channel capacity. If there is no secure and large-capacity channel, there will be great risks in listing coins on CEX.
Why do I feel that the opportunity to ambush the Lightning Network has arrived now?
1. LN Exchange will be launched soon, which will greatly solve the liquidity problem of Lightning Network;
2. LN Node solves the centralization problem that Lnfi has been criticized for
3. The introduction of stablecoins will be based on the Mass Adoption of Lightning Network payment scenarios
So where are the opportunities? I personally see double T and BURGER
The reasons for being optimistic about double T are:
1. 80% of the supply will be destroyed, causing deflation.
2. The tokens held by existing users will be exchanged for platform coins, and the platform coins will enjoy the income rights of Lnfi platform products (with empowerment)
3. The price is low (it has dropped 20 times from its high point) and many people in the community are still holding on.
Of course, these reasons need to be based on the project party's commitment to keep its promises. Deflation + empowerment. I hope the team will not backstab users when the token falls so much. This is the most important thing.
Reasons to be optimistic about BURGER:
1. It is very popular, all tokens are airdropped, there are hundreds of thousands of token holders, and the community is very strong.
2. The narrative is good. The meme coin itself is strong in this cycle, and Trump using Bitcoin to buy hamburgers has brought about a topic of narrative.
3. The price is also low, and the current market value is about 1 million yuan
Of course, the above analysis is based on the premise that the Lightning Network continues to explode and solves the liquidity problem. How it will develop in the future depends on the actual situation. This article is not an advertisement, it is just sharing, and the above analysis does not constitute investment advice.
