Lightning Pool

Lightning Pool[10] is a non-custodial channel lease marketplace (CLM) that leverages modern auction theory to efficiently allocate inbound channel liquidity within the Lightning Network. The marketplace allows participants to buy and sell channel capacity, specifically through a financial instrument known as a Lightning Channel Lease (LCL).

An LCL operates similarly to a traditional bond: one party commits capital to another for productive use within the Lightning Network, and in return, the lender is compensated for their opportunity cost. However, unlike traditional bonds, the capital within an LCL is locked into the Lightning Network for a set duration, enabling specific routing and transaction functionalities during that period. The commitment to a particular duration is enforced on-chain through Bitcoin Script, ensuring that the leased channels remain open for the agreed-upon time frame, thus providing stability and predictability in liquidity allocation.

For PegaSys, Lightning Pool presents a strategic opportunity to maximize yield generation on the Lightning. The lightning pool sends us the most lucrative demand signals, and the protocol decides whether or not to meet the demand with our free liquidity. The fixed-term nature of LCLs aligns well with PegaSys’s liquidity management strategy, allowing the protocol to lock in predictably high returns through the pool while always having a liquid reserve in basic lightning channels to pay back our depositors on demand.

Unfortunately, Lightning Pool doesn’t have any publicly available figures for historical orders, APRs, etc. However, we can extrapolate these numbers from another similar liquidity marketplace on Lightning called Amboss[11]. Amboss claims that the average APR for providing liquidity is north of 5%. Keep in mind that this is the average, and having aggregated liquidity will allow PegaSys to capitalize on the most lucrative opportunities in the market.