Lightning Loop Alpha: An Easier Way to Receive Funds using the Lightning Network
By Dj on ALTCOIN MAGAZINE
The Lightning Network development team has put a march in its beta phase Lightning Loop, a non-custodial service that makes it easier for people to receive funds for LN.
The Lightning Labs service allows you to connect Bitcoin in and out of the chain by exchanging ‘submarine’. In the current version of the Loop software, only chain-to-chain exchanges are allowed, where the Loop client sends out-of-chain funds in exchange for the funds being returned to it.
According to the development team, this problem generated that over time, the capacity of payment channels with Bitcoin would be filled before the massive use and could not accept more payments with Bitcoin.
Lightning channels are like money tubes: the more you send, the more you can receive and vice versa. But the amount of funds remains within the channel, so Lightning requires “entry capacity” to receive funds.
The new custody system is called Loop Out and will allow users to increase their reception capacity by downloading their funds from the network while keeping channels open.
Loop Out can be used to move funds to an exchange, wallet services or cold storage, as the user decides.
According to its official blog Lightning Labs, the custody service can be used in various situations such as:
- Acquisition of liquidity funds from the incoming channel from arbitrary nodes in the Lightning network.
- Deposit funds in a Bitcoin address in the chain without closing the active channels.
- Payment to chain backup addresses in case of lack of liquidity of the route.
The need for Lightning Loop comes from the high growth of the Lightning network and the number of applications during the last year. LoopOut initiates an output loop exchange with given parameters, which allows a simple RPC for any exchange.
In addition, the Lightning Labs team plans to launch soon a complement to this solution called Loop In, which will allow users to fill their Lightning channels with Bitcoins in the chain of exchanges or wallets.
As is known, when a user makes a series of purchases through LN, the balance of his channel decreases and therefore his ability to pay. With Loop In you can use to recharge funds in LN from an external wallet or through an exchange account.
With Loop, users can keep the Lightning Network channels open indefinitely, which makes the network more efficient, more stable and more economical to use.
Loop Out transactions are limited to a maximum of 0.01 BTC (1M sats) for the initial test version from already available in the official Github channel of the company, to be used by developers through the gRPC API of Ligtning Loop.
According to the site 1ML.com, the number of nodes of the LN network has increased by 17.34% and the number of channels by 39.8% in the last year, without this launch. The capacity of Lightning Network reports a growth of 51% in the last months and it is expected that with Loop these figures will be doubled.
Bitrefill and Blockstream are the main drivers of the massive use of Lightning Network.