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  1. Technical Details

PegaSys Network

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Last updated 7 months ago

PegaSys’s principle vision is to allow Bitcoin holders to earn native yield on their capital in a passive, non-custodial manner. We aim to achieve this by aggregating liquidity from depositors, provisioning it to the Lightning Network in numerous ways, and distributing the accrued fees back to our depositors. By using idle Bitcoin to enable cheaper (less “hops”) and higher value (more channel capacity) transactions on Lightning, in addition to providing native yield to depositors, PegaSys is mutually beneficial to Bitcoin and Lightning users.

Deposits

The only thing a prospective depositor needs to do to start earning yield is to create a Deposit UTXO using a spending script that can be used in one of two ways:

  • Spending by PegaSys: Once included in a block, the UTXO can be spent by the PegaSys network using an aggregated Schnorr signature. This mechanism provides flexibility for the PegaSys network to manage funds as needed.

  • Time-locked Spending by the Depositor: If 144 blocks (approximately 1 day) have passed since the UTXO was created, the depositor can spend the UTXO using their key. This spending path acts as an escape hatch for depositors if PegaSys hasn’t allocated their funds within a day.

Once the deposit UTXO has been added to a block and finalized (received 6 confirmations), the PegaSys network will add the UTXO to its “free liquidity pool” and make it provisionable to the lightning network for earning yield.

Network Architecture