Hi CKB Community,
I recently conducted a preliminary analysis of the Lightning Network ecosystem to identify strategic opportunities for our Fiber Network and potential areas for community development.
The analysis covers three major areas:
- Infrastructure (clients, wallets, LSPs, etc.)
- Ecosystem Applications (DeFi, gaming, IoT, social, etc.)
- Supporting Elements (developer tools, regulatory aspects, education)
For each component, I’ve examined some existing projects, identified challenges, and explored potential opportunities where our CKB, RGB++, and Fiber could add significant value.
While this analysis is preliminary, I hope it sparks discussions and inspires further exploration.
Your thoughts, feedback, and ideas for potential implementations are highly welcomed!
Appreciate the contributions and feedbacks from Matt, Jacky, Yifan, and Kelly
1. Infrastructure
1.1 LN Client Implementations
The Lightning Network (LN) has multiple interoperable client implementations, each with different design choices:
LND (Lightning Network Daemon), developed by Lightning Labs (in Go) is the most popular implementation, running on approximately 91% of nodes as of the end of 2022 (Ref). It emphasizes routing reliability (finding efficient paths and achieving high payment success rates) but at the cost of some privacy.
Core Lightning (CLN), developed by Blockstream (in C, formerly known as c-lightning), is a lightweight, modular implementation focused on performance and scalability (Ref). CLN supports a plugin system, allowing customization of routing, fees, etc., offering flexibility that LND’s fixed RPC methods cannot fully match. CLN’s default routing favors privacy (using route randomization and shadow routing), but sometimes at the expense of success rates.
Eclair, developed by ACINQ (in Scala), is commonly used for mobile and enterprise deployments. Its design focuses on simplicity and security, making it popular in commercial use cases; ACINQ’s Phoenix wallet and other services run on Eclair (Ref). Eclair is known for its good scalability (it can distribute node operations across multiple servers) and offers an easy integration path for services.
LDK (Lightning Development Kit), developed by Spiral/Block (in Rust), is not a full node but a flexible library/SDK. LDK allows developers to embed Lightning Network functionality into applications, enabling custom logic and even running on IoT devices (Ref), suitable for projects requiring flexibility beyond typical node capabilities.
Challenges:
- Operational Scalability: The diversity of implementations encourages innovation but also brings challenges. Each implementation has slightly different tools and sometimes unique features not immediately available to others. While interoperability is maintained through specifications like BOLT, keeping all implementations in sync with the latest specs (e.g., new channel types, dual funding, Taproot features) requires coordination.
- Drawbacks of LND Dominance: For example, in 2022, a parsing bug in LND caused many LND nodes to crash, severely affecting network reliability.
Potential Opportunities for Fiber:
Complement existing LN clients, extending their functionality (multi-asset, cross-chain), offering simpler integration, and collaborating with their communities (potentially contributing code or specifications).
- Fiber nodes could be modular (like CLN) but also developer-friendly (like LND), attracting enterprises and application developers.
- Fiber could improve interoperability tools: currently, each LN implementation has unique interfaces (RPC, CLI). Fiber could provide a unified API that abstracts whether a channel is on Bitcoin-LN or Fiber, simplifying the developer experience.
- Fiber could also address some operational challenges by introducing enhanced backup and recovery techniques (possibly using on-chain snapshots or smart contracts to protect channel states).
1.2 Wallet
The Lightning Network ecosystem includes a variety of wallets catering to different user needs, such as:
Phoenix: A non-custodial mobile wallet that automatically opens channels for users and manages inbound liquidity. When receiving funds without existing channels, Phoenix opens a new channel to its node and charges a small on-chain fee for this “swap-in” operation (Ref). Phoenix also supports trustless zero-confirmation channel openings using ACINQ as the counterparty, allowing immediate use of received funds after a single confirmation. However, this solution relies on ACINQ’s infrastructure (LSP) for liquidity and watchtower services.
Muun: Does not hold LN channels on the device. Muun uses submarine swaps, converting each Lightning payment sent or received into an on-chain transaction through Muun’s servers, and vice versa (Ref). However, it sacrifices some benefits of the Lightning Network: every LN payment involves an on-chain fee, meaning Muun cannot deliver the usual low-cost, instant Lightning experience.
Breez: A non-custodial wallet that runs a full Lightning node on the user’s phone (underpinned by LND, using Neutrino for lightweight Bitcoin synchronization) (Ref). Breez automatically opens channels when needed (using Breez’s node), and uses zero-confirmation channel technology to allow instant reception. It also provides built-in services like merchant point-of-sale modes and podcast streaming payments. Recently, Breez migrated to Blockstream’s Greenlight (nodes run in the cloud, keys remain on the device) for improved reliability.
BlueWallet: Offers a custodial LN service (powered by LndHub), allowing users to quickly use the Lightning Network by trusting BlueWallet’s servers. Currently, BlueWallet has discontinued LndHub services and encourages users to connect to self-hosted LND services (Ref).
Wallet of Satoshi (WoS): Fully custodial, developed by Living Room of Satoshi, and dubbed “the world’s simplest Lightning wallet.” Users can register with just an email and immediately start sending/receiving. Its user-friendliness has led to over 500,000 downloads and widespread use for tipping and micro-payments.
Joltz: Provides wallet SDK and is integrating taproot USDT for swap between USDT & BTC on-chain & Lightning.
Challenges:
- Inbound Liquidity: Users cannot receive funds until someone opens a channel to them. Solutions include using LSPs (Phoenix/Breez), swaps (Muun), or custodial services (WoS) to mask this challenge.
- Capacity Management: If a channel’s balance is skewed to one side, sending or receiving might fail. Wallets address this through automatic rebalancing or opening new channels, but this adds complexity (sometimes with unexpected on-chain fees for the user).
- Channel Backup and Recovery: If a user loses their device without proper channel backups, funds in the channels could be lost. For instance, Phoenix uses static channel backups and relies on its servers to assist with force-closing channels during recovery on a new device. Breez uses cloud backups of channel states encrypted with user keys. These mechanisms are effective but not intuitive and require user education.
- Payment Reliability: Payments may fail due to routing issues. Wallets often attempt multiple routes or use trampolines (Phoenix) to increase success rates, but this can confuse new LN users (since such issues rarely occur on-chain).
Potential Opportunities for Fiber:
Leveraging infrastructure like CKB, RGB++, UTXOstack, and JoyID, Fiber already has foundational capabilities for cross-chain interoperability, automated liquidity management, and multi-asset support. Additional opportunities include:
- Further optimizing the wallet experience.
- Utilizing CKB’s smart contract capabilities for more secure state storage and enhancing watchtower services.
1.3 User Friendly Payment
LNURL and Lightning Address (Current Workarounds): Currently widely used. LNURL is a set of extensions built on top of the Lightning Network that use network URLs for coordination. A Lightning Address(user@domain) is essentially a user-friendly abstraction of LNURL-pay (Ref).
Advantages: Flexible, allowing for rapid deployment of new features without requiring changes to the Lightning Network itself (Ref).
Disadvantages: Requires an HTTPS server or at least an accessible endpoint, relying on third parties or additional setup (Ref). May compromise privacy by exposing IP addresses and linking payments to domain names (Ref).
BOLT12 Offers (Lightning Network Native Static Address): Designed to replicate the functionality of LNURL within the Lightning Network protocol itself (Ref). As of early 2025, it has not yet become a default part of Lightning Network implementations but has some form of implementation in c-lightning/Core Lightning and test wallets. When a payer reads an offer, an onion message is sent over the Lightning Network to request an invoice from the recipient’s node, and the recipient replies with a real invoice—all occurring natively within the Lightning Network, without requiring a web server (Ref).
Advantages: Eliminates the need for third-party web servers and leverages the security of the Lightning Network (communications are end-to-end encrypted and authenticated using the node’s public key) (Ref).
Disadvantages: The main drawback is the current limited adoption. Additionally, the QR code size for offers is relatively large (Ref).
Universal Money Address (UMA): Supported by Lightspark. UMA allows payments to be routed via the Lightning Network and includes messaging capabilities for compliance information, currency conversion, and other features (Ref).
Advantages: Retains the benefits of user@domain while aiming to integrate more complex features required for commercial transactions. Multiple exchanges/wallets (Coins.ph, Xapo Bank, Bitnob, etc.) plan to support UMA addresses (Ref).
Disadvantages: UMA extends LNURL/Lightning Address through an additional layer, potentially facing the same requirements for running servers or services to handle messaging and logic. It is led by a single company and is not a Bitcoin “BIP” or Lightning Network “BOLT” standard.
BIP-353 DNS Payment Records: Experimental support was introduced by ACINQ’s Phoenix wallet at the end of 2023. BIP-353 uses DNS as a directory for payment information, mapping identifiers (e.g., alice.domain.com or email-like strings) to payment instructions, which then connect to a Lightning node address/BOLT12 offer (Ref).
Advantages: Eliminates the need for a continuously running web server (Ref). User-friendly and can improve sender privacy.
Disadvantages: DNS has caching and propagation delays, which may complicate rapid updates to payment information.
Keysend (Spontaneous Payments to a Node ID): Allows sending payments to a node’s public key without an invoice.
Advantages: Simple for the sender (only requires an ID and amount). Useful for donations, streaming payments, and similar use cases.
Disadvantages: Lacks a human-friendly addressing method. The recipient node must be online with an open route. Keysend is not an official BOLT standard, leading some implementations to disable it by default for security reasons.
Potential Opportunities for Fiber:
User-friendly payments are also crucial for various Fiber-based applications (e.g., Social, Gaming, Compliance). Recommended actions:
- Prioritize support for LNURL/Lightning Address.
- Actively evaluate the development of BOLT12 Offers and UMA.
1.4 Exchange
Several major exchanges have integrated the Lightning Network for Bitcoin deposits and withdrawals:
Bitfinex was an early adopter (2019), running a well-connected LN node, making it one of the largest nodes on the network. Initially, Bitfinex limited LN withdrawals to ~0.04 BTC, but after seeing success, they increased the limit to 0.5 BTC per payment and even opened very large channels (2 BTC) (Ref).
Kraken integrated the Lightning Network in 2022, using LND (Ref) and set a withdrawal/deposit limit of 0.1 BTC to mitigate risks.
OKX and Bitstamp have also enabled LN, while Binance added Lightning Network support in mid-2023. Exchange nodes have effectively become major hubs in the Lightning Network topology. For example, Binance and OKX nodes are now among the largest in terms of capacity, each accounting for approximately 15% of the network’s total capacity (Ref). However, while improving overall liquidity, this also raises concerns about centralization.
Challenges:
- Technical aspects: Exchanges must actively manage channels, increasing operational and development maintenance costs.
- Regulatory compliance: Some regulated exchanges have taken an ambiguous stance toward LN. For example, Kraken has disabled LN in certain regions (Ref).
Potential Opportunities for Fiber:
- Multi-asset support: This could be attractive to exchanges.
- Enhanced interoperability and optimized deposit/withdrawal pathways: Exchanges could establish both Fiber and LN channels simultaneously, providing users with better liquidity routes and even facilitating atomic swaps to convert exchange-held BTC into the assets users need.
- Improved compliance: Given the programmability of CKB, Fiber could potentially offer identity verification mechanisms.
1.5 LSP
LSPs (Lightning Service Providers) offer inbound liquidity or assist with liquidity management:
Voltage provides a product called Flow, which opens channels to customer nodes in the cloud.
Amboss: has launched Magma, a marketplace for node operators to buy and sell channels.
Core Lightning (Blockstream): introduced Liquidity Ads, leveraging the gossip network.
Lightning Labs launched Pool, a channel leasing auction market. However, community-run solutions like Magma, or even LSP coordination through Telegram groups, have been observed to be more popular than Pool’s auction model.
Challenges:
- Incentives and sustainable revenue: Running a routing node and providing liquidity currently generates low returns, with capital invested in channels yielding an annualized ROI of only about 0.5-1% (Ref), which is barely enough to cover costs. LSPs either operate out of altruism or bet on future traffic growth. Some LSPs charge upfront fees for channels (such as Phoenix’s on-chain fee for opening channels or fixed fees via Pool/Magma) as a way to monetize liquidity, exploring diversified business models.
- Centralization concerns: Low profitability means that a small number of well-funded LSPs handle most of the business.
Potential Opportunities for Fiber:
Beyond the DLSP (Decentralized Lightning Service Provider) approach taken by UTXOStack, further exploration may be needed in automatic pricing mechanisms and demand-driven dynamic fee adjustment models.
1.6 Data Analytics & Network Monitoring
Due to the privacy nature of the Lightning Network, understanding its status is challenging. Nevertheless, some services provide valuable insights:
Amboss displays public channel information, node capacity, and fees, and even offers community features such as chat and reputation tools for node operators. Amboss provides node rankings, historical growth charts, and an interface for Magma (the liquidity marketplace).
1ML lists nodes, channels, and network statistics, though its data updates are not always timely.
Terminal is part of the Lightning Loop/Terminal suite, serving as a tool for node operators. It assigns scores (Terminal WebRank) to nodes based on uptime, connectivity, and other metrics to help identify reliable peers.
Challenges:
- An estimated 20-40% of channels are unpublished private channels that do not appear in data service providers (Ref).
- Monitoring network health, such as actual payment throughput (number or volume of transactions), payment success or failure rates, and unusual events (e.g., mass channel closures), remains difficult.
- The amount of idle liquidity and the actual usage of specific services/projects is hard to determine.
Potential Opportunities for Fiber:
Fiber could enhance network observability while maintaining necessary privacy:
- Selective Macro Monitoring: Fiber nodes could periodically publish anonymous statistical data on public dashboards (e.g., success rates, transaction volume ranges).
- Advanced Monitoring API: Integration with services like Amboss to publish rich data from edge nodes, including cross-chain swaps and multi-asset liquidity metrics.
- Diverse Periodic Reports: Providing insights and network growth confidence for ecosystem participants and investors.
1.7 Watchtower & Security
If a user goes offline, a counterparty may attempt to cheat by broadcasting an outdated channel state. Watchtowers monitor such attempts and issue penalty transactions to prevent fraud:
LND has an integrated watchtower (available since v0.7 in both client and server modes) (Ref). However, it is not enabled by default, and there is no widely accessible public network of LND watchtower servers.
Core Lightning relies on a third-party plugin called “Eye of Satoshi” for watchtower functionality (Ref). Eye of Satoshi offers two types of watchtowers:
- Altruistic towers that provide services for free.
- Reward-based towers that take a portion of penalty funds if a fraud attempt is detected (Ref).
Phoenix uses ACINQ’s own node as a watchtower for its users. Since ACINQ is a channel partner, it has an incentive not to cheat, and if the user goes offline, ACINQ can safely force-close channels.
Breez has transitioned to Greenlight, meaning nodes are always online, reducing the need for external watchtowers for these users.
Others, such as the BlueWallet team’s Guardian service and various hobbyist-run watchtowers, remain available.
Challenges:
- Lack of Awareness: Running or using a watchtower is not common among everyday users. Many trust major nodes not to cheat or assume that regularly coming online is enough to detect fraud.
- Centralization Concerns: Only a few watchtowers exist, and many users rely on them. Additionally, watchtowers could censor transactions or act maliciously by refusing to publish penalty transactions.
- Integration and Incentives: Deploying watchtowers is technically challenging, and there are few financial incentives. In theory, Eltoo could simplify watchtower logic (removing the need for penalties and only ensuring the latest state is confirmed), but it has not yet been deployed.
Potential Opportunities for Fiber:
- Leveraging a token-based economy to incentivize watchtower participation.
- Exploring Fiber’s potential use as a watchtower solution for the Lightning Network.
1.8 APIs & Node Management
The Lightning Network ecosystem provides various APIs and management tools to integrate LN payments or operate nodes:
Developer-facing APIs offer high-level interfaces that enable sending and receiving Lightning payments without running a node, facilitating use cases like paywalled content, gaming, and tipping bots.
Strike allows merchants to charge customers via the Lightning Network and receive fiat settlements, essentially abstracting LN as a payment channel (Ref).
OpenNode enables developers to create invoices, check their status, and even convert funds into fiat automatically.
LNPay allows developers to create multiple user wallets on its nodes via API, making it useful for applications where each user has an LN balance without needing their own node (e.g., tipping apps).
Node management tools make node operations more user-friendly than CLI commands, but they still assume basic knowledge (channel IDs, fee rates, etc.).
Ride The Lightning (RTL) supports LND, CLN, and Eclair via a web GUI, offering dashboards for opening/closing channels, sending payments, and viewing analytics.
ThunderHub is a popular web interface focused on LND, providing a smooth UI for managing channels and on-chain funds.
Lightning Terminal (LiT) integrates Loop (for channel liquidity swaps), Pool (for channel markets), and a node manager into a single interface.
Challenges:
- Lack of a unified API: Each LN implementation exposes different RPC or REST endpoints. Attempts like LnHub and Lightning Gateway exist, but none have become a standard.
- Integration difficulties: While APIs like OpenNode exist, handling invoice expiration, on-chain fallback, and failed payments requires meticulous coding, posing a barrier for developers.
- Remote management and automation gaps: Mobile apps like Zeus allow node control from a phone, but setup (e.g., TLS certificates) is complex. Enterprise-level multi-node management is also challenging. Additionally, automation tools for dynamic fee adjustments, notifications, and monitoring are still lacking.
Potential Opportunities for Fiber:
The unified payment SDK mentioned in the UTXOstack whitepaper is crucial for reducing user cognitive load. Additionally:
- Node-as-a-Service (NaaS): Blockstream’s Greenlight has implemented a model where nodes are hosted while users retain key control (Ref). Fiber could offer a similar cloud service where users control funds via private keys while Fiber Cloud ensures nodes are always online and updated.
- AI-driven automation: Leveraging network conditions to optimize routing fees and enabling natural language operations (e.g., “Connect to a node that improves Asia-region connectivity” or “Open a 0.1 BTC channel using my CKB”).
1.9 Hardware & Edge Computing
Running a Lightning node on personal hardware has been a popular movement to support decentralization:
Umbrel gained massive popularity in 2021 with a sleek UI and app store. At one point, nearly half of all new Lightning nodes ran on Umbrel OS (Ref).
RaspiBlitz is a more technical and highly customizable option.
Nodl provides pre-assembled, high-end hardware, used by some large routing nodes and enterprises.
Challenges:
- Hardware is caught in a high-cost vs. low-performance dilemma—most node hardware isn’t powerful enough to run large AI models, while low-cost solutions like Raspberry Pi often struggle when running multiple channels or applications.
- Consumer-grade hardware’s reliability in edge computing environments is uncertain.
Potential Opportunities for Fiber:
- Exploring edge computing and low-cost hardware solutions, providing sub-$100 devices for applications like LightningATMs (coin-operated SAT purchases) (Ref).
- AI integration into hardware—instead of running a full-fledged LLM, deploy small models on Lightning-compatible hardware to optimize specific functions in pre- and post-transaction processes.
2. Ecosystem Applications
2.1 Financial Services
A new wave of Bitcoin-centric digital banks and fintech applications is leveraging the Lightning Network:
Strike functions similarly to Venmo, allowing users in certain regions to hold fiat balances. When making international transfers, Strike converts the fiat into BTC, sends it via the Lightning Network, and converts it back to local currency on the recipient’s end (Ref).
Chivo, the Salvadoran government’s wallet, integrates the Lightning Network for domestic payments and remittances, allowing users to make instant payments to merchants and receive funds from abroad.
LNMarkets is a Lightning-based trading and lending platform where users can instantly deposit BTC via Lightning to trade derivatives without needing a formal account. Additionally, Bitfinex and other platforms are exploring the Lightning Network for fast collateral transfers between exchanges.
LQwD (LQwD Finance) has been actively opening channels and deploying nodes to provide liquidity and earn routing fees (Ref). This can be seen as an attempt to become a “Lightning Bank,” generating interest (fees) from Lightning Network liquidity deployment.
Cash App, one of the leading mobile financial apps in the U.S., has integrated Lightning Network for Bitcoin transfers.
Abra and Atomic Loans are experimenting with using the Lightning Network for rapid collateral replenishment and liquidation.
Challenges:
- Regulatory Compliance (KYC/AML): The privacy nature of the Lightning Network poses challenges for integrating with financial services.
- Liquidity Management: Fintech services with potentially thousands or millions of users must manage Lightning Network channels efficiently, which inevitably leads to some level of centralization trade-offs.
Potential Opportunities for Fiber:
- Fiber’s multi-asset and cross-chain capabilities, along with a developer-friendly SDK, could be highly attractive to financial service providers.
- Channel-based lending protocols—leveraging edge nodes, CKB programmability, and HTLCs to create a Lightning-native version of Aave.
2.2 Gaming & eSports
Gaming and eSports have a natural fit for microtransactions and real-time rewards:
Zebedee provides plugins and SDKs that allow games to instantly reward players with sats or facilitate value transfers using custodial channels. In Counter-Strike: GO, players can earn small amounts of Bitcoin per kill, tip other players, or pay to enter matches (Ref). The entire process abstracts Lightning Network complexity away from the player.
THNDR Games develops mobile games that reward players with Bitcoin through achievements or sweepstakes (Ref).
Satoshi’s Games (Lightnite) has created a Fortnite-like game experimenting with streaming money mechanics (continuously earning or paying throughout gameplay).
Challenges:
- Scalability Issues: While centralized solutions like Zebedee’s custodial channels or channel factories exist, decentralized channel management for millions of players remains an open challenge.
- Interoperability Between Games: Standards like Lightning Addresses (user@domain) are still in their infancy, and a unified identity system for receiving rewards across different games is needed.
Potential Opportunities for Fiber:
- NFTs and digital assets on channels—enabling tickets, gear, and passcards within games. This could be a significant advantage for Fiber in the gaming space.
- Engaging projects like Zebedee and THNDR Games—pitching Fiber solutions to metaverse and sandbox games like Roblox or Minecraft.
- Building credibility through open-source gaming projects—creating demo integrations in the style of zkga.me, which supported early Dark Forest adoption.
2.3 Micropayments & Streaming
Breez Podcast Player allows listeners to stream sats to podcast hosts as they listen. This enables content creators to receive real-time payments directly from consumers, without platform fees (Ref).
Fountain’s “boost” feature enables listeners to send one-time tips (with messages) to support hosts during a show. Projects like PodcastIndex and Alby have already standardized SDKs for this functionality.
Wavlake enables artists to charge per-second fees for streaming audio via the Lightning Network (Ref).
Y’alls allows readers to pay a few sats to unlock and read articles, using LNURL-pay links for one-click payments.
LSAT (Lightning Service Authentication Token) enables users to pay small fees via the Lightning Network to access APIs or online services, combining payments with authentication (Ref). This allows for pay-per-API-call models instead of monthly subscriptions or metered Wi-Fi access, where users seamlessly pay per minute in sats.
Challenges:
- Intermittent Connectivity: Streaming payments require both parties to stay online. Podcast apps often solve this by using always-on custodial wallet nodes as intermediaries.
- User Experience: These payments must be frictionless to be valuable. Features like Lightning Addresses and LNURL are crucial. Additionally, stablecoins are often more attractive for non-crypto-native creators.
Potential Opportunities for Fiber:
Beyond supporting stablecoins, Fiber could introduce several innovations:
- Smart contract-based group payments or split payments across multiple parties (e.g., streaming a 1-cent payment, automatically splitting it into three parts for the artist, producer, and platform). While possible on the Lightning Network via keysend and script tricks, Fiber could make this process more user-friendly.
- Web-based micropayment models, such as a more advanced Lightning-powered Galaxy/Taskon—where ad tasks are converted into seamless engagement actions (e.g., time spent on a page, clicks, interactions). Or a pay-per-word model for literature platforms similar to Jinjiang Literature.
- LSAT and L402 Protocol (Ref) integrations:
- Earning digital assets for physical interactions (e.g., tapping into location-based rewards where payments also serve as authentication).
- Social identity verification—using payments to verify humans vs. bots. Users could accumulate “Human Tokens”, proving they are real people instead of machines. This could replace traditional CAPTCHA mechanisms and integrate with Vitalik’s concept of social verification.
2.4 Social & Tipping
Nostr + Zaps allows users to send sats directly to a Lightning Address with an attached comment through Zaps-enabled Nostr clients. Zaps are facilitated by services like Wallet of Satoshi or LNAddress, which link static identities to Lightning invoices.
Zion is a Lightning-powered social application and creator community where content is hosted in private hubs, and fans pay sats to access. Each user is integrated with an LND node (via Greenlight), but Zion has struggled with poor user experience.
Sphinx Chat transmits messages using 1-sat Lightning transactions where messages are embedded as payment memos. This both funds the infrastructure and adds a cost barrier to spam, discouraging malicious actors from flooding the network.
Challenges:
- User Experience Barriers: While Lightning Addresses and LNURL have simplified payments, the process still needs further optimization. Additionally, Web2 social network users may not understand sats/stablecoins or have tokens readily available.
- Migration Costs: Social platforms rely heavily on user connections, making it extremely difficult to migrate users from Web2 social networks to LN-based alternatives.
Potential Opportunities for Fiber:
- Fiber can enhance social applications by enabling cross-channel tipping and multi-asset support. One key advantage would be easing channel management in social environments.
- Fiber should focus on developing a wallet UX that integrates chat and social features. Additionally, identity frameworks should be built into the protocol to leverage Fiber’s multi-asset capabilities.
- Timing could be crucial. In the event of geopolitical instability or fiat system failures in the coming years, Fiber could push stablecoin adoption alongside social applications as a viable alternative.
2.5 IoT & Machine Payments
The Lightning Network’s high-speed, low-cost micropayments and minimal energy & bandwidth requirements make it highly compatible with Internet of Things (IoT) applications, though most use cases remain in the prototype phase:
Parking payments: Researchers ran a Lightning node on a Raspberry Pi Zero to demonstrate a toy car making millisecond-based parking payments (Ref).
EV charging: Electric vehicles could stream payments in sats per kilowatt-hour while charging.
WiFi hotspots & data networks: Drones could pay a rooftop LoRaWAN hotspot to relay data to the internet.
Infrastructure sensors: Cities could deploy sensors for weather, traffic, or environmental data, funded by companies or vehicles that use the data. Queries or data points could be charged per request via the Lightning Network.
Manufacturing & robotics: Factories could coordinate resources through micropayments, such as machines paying per task (e.g., 3D printing, AI model training, or GPU rental).
Challenges:
- Hardware limitations: Running a full Lightning node on microcontrollers like Arduino is impractical. A workaround is using nearby gateways (e.g., Raspberry Pi or home hubs) to handle payments on behalf of smaller IoT devices.
- Offline issues: IoT devices often go offline intermittently, complicating real-time payment processing.
- Standardization & adoption: The IoT industry lacks a unified standard for Lightning-based machine payments.
Potential Opportunities for Fiber:
- Stablecoins could be more widely accepted in IoT industries, particularly in the Eurozone, where businesses may prefer EUR-denominated settlements.
- Designing ultra-light clients—for example, an Airbnb smart lock could generate a QR code (“Pay 100 USDI to unlock”) via a Fiber Hub device. The user pays through Fiber, and the Hub confirms payment before unlocking the door.
2.6 Crowdfunding & Donations
The Lightning Network is particularly useful for grassroots crowdfunding and charitable donations, especially in cases of censorship resistance or urgent funding needs:
Tallycoin allows direct Bitcoin LN donations to be received into non-custodial wallets (Ref). During events like the 2022 Canadian trucker protests, when platforms like GoFundMe were forced to halt fundraising, Tallycoin helped raise significant amounts of BTC, circumventing government censorship (Ref).
Geyser Fund focuses on creator-led projects seeking funding, where funds go directly to Lightning wallets rather than being held in custody (Ref).
Kickstarter, by contrast, holds funds in escrow until the fundraising goal is met.
Challenges:
- Regulatory compliance concerns
- Transparency issues, as verifying the authenticity of crowdfunding projects and ensuring execution has always been a significant challenge.
Potential Opportunities for Fiber:
Beyond multi-asset support, Fiber could also:
- Enable recurring or streaming donations.
- Integrate with DAOs and authentication mechanisms like LSAT, helping address challenges related to project screening, fund distribution, and delivery assurance.
2.7 E-Commerce & P2P Marketplaces
BTCPay Server is an open-source payment processor that allows merchants to accept Lightning and on-chain BTC payments with ease. It has been adopted by thousands of merchants—for example, in El Salvador, some retailers began using BTCPay with Lightning after the Bitcoin Law was introduced.
OpenNode provides APIs and checkout integrations (including Shopify, WooCommerce, and other plugins) to help merchants accept Lightning payments with optional fiat conversion.
IBEX Pay has helped dozens of physical merchants in Miami accept Lightning (Ref). IBEX sets up tablets or POS terminals that display Lightning invoices as QR codes, while also handling fiat conversion if needed.
Bitrefill enables users to buy gift cards for global retailers, gas stations, and other services via Lightning, effectively allowing users to cover daily expenses with BTC. Bitrefill even offers 2% discounts for Lightning payments (Ref).
El Zonte in El Salvador and Bitcoin Island in the Philippines have emerged as Lightning-friendly tourist zones, where travelers and locals can easily make microtransactions without incurring foreign exchange fees from Visa or Mastercard.
Challenges:
- Bitcoin’s volatility: OpenNode addresses this by immediately converting payments to fiat, but this introduces a centralized intermediary.
- Refund complexity: Merchants must manually request an invoice or Lightning Address from customers for refunds. LNURL has introduced static refund endpoints, but the process remains cumbersome.
- Merchant training & support: Some merchants, such as those in El Salvador, have struggled with understanding Lightning operations.
- Integration barriers: There is no one-click Lightning integration for most platforms, unless merchants use OpenNode or Strike. Self-hosted solutions like BTCPay require additional technical knowledge.
- Channel liquidity management: If a merchant suddenly processes a surge of transactions, they may run out of inbound liquidity. Services like “Liquidity-as-a-Service” (e.g., Voltage) exist, but this is beyond the knowledge of most merchants.
Potential Opportunities for Fiber:
Beyond Fiber’s ongoing Shopify integration and stablecoin support, Fiber could:
- Improve the refund process by implementing retained invoices or bi-directional channels.
- Enable split payments and multi-party transactions, significantly enhancing user and merchant experiences.
3. Other Supporting Elements
3.1 Developer Tools & SDKs
LDK (Lightning Development Kit) allows LN to be integrated into custom applications (such as wallets) without requiring a separate node process.
Breez SDK abstracts much of the Lightning logic (in combination with Greenlight), enabling mobile applications to send and receive payments with minimal code.
Greenlight SDK provides a hosted node where developers interact through a simple API, while complex computations are handled in the cloud (Ref).
Challenges:
- Understanding channel states, handling failed payments, and managing liquidity remain complex. Documentation is scattered across the BOLT specifications, various implementation wikis, and community guides.
- No single SDK currently covers all use cases, forcing developers to piece together multiple tools.
- Testing LN applications requires setting up a regtest or signet cluster, or using containerized tools like Polar, which can be challenging.
Potential Opportunities for Fiber:
- Providing a unified SDK that abstracts most complexities and attracts developers. For example, developers could simply call
sendPayment(amount, asset, destination), while Fiber handles routing, asset swaps, and channel discovery. - Maintaining comprehensive and user-friendly documentation with examples.
- Designing SDKs for modern frameworks—for instance, providing a JavaScript SDK for web developers to integrate payments into web applications or use LSAT for authentication. Currently, LN lacks a robust web-based integration approach outside of LNBits or custom implementations.
3.2 Regulatory & Compliance
Regulators have not specifically targeted Lightning yet, but compliance challenges are emerging, especially for exchanges integrating LN:
The Travel Rule (Financial Action Task Force - FATF Recommendation) mandates that crypto transfers exceeding $1,000 between two regulated entities must include sender and receiver identity information. Some legal experts suggest limiting LN transactions to smaller amounts to avoid this issue. However, Kraken’s lawsuit in Germany suggests that regulators consider LN too opaque under existing frameworks (Ref).
KYC challenges: Most LN wallets and nodes are self-custodial and do not perform KYC, making it difficult for fully regulated businesses to use LN at scale.
Potential regulatory barriers: In certain jurisdictions, running a Lightning node that forwards payments on behalf of others could be classified as money transmission, requiring a license.
Taxation: Microtransactions complicate tax reporting. The lack of clear frameworks limits large-scale adoption in regions like the US.
Potential Opportunities for Fiber:
- Leveraging CKB to provide a built-in identity layer, which may facilitate adoption by major financial institutions.
- Implementing whitelisting mechanisms and compliant nodes.
- Exploring regulatory-friendly network zones or potential integration with CBDCs.
3.3 Education & Awareness
The Lightning community has grown significantly, but education remains critical to attracting new developers, users, and businesses:
Mastering the Lightning Network by Antonopoulos and others is a comprehensive resource on LN (Ref). The book is freely available and helps with in-depth LN understanding.
Bitcoin Classroom, Bolt.Fun, and local meetups regularly host Lightning workshops.
Bolt.Fun organized the “Legends of Lightning” hackathon (Ref).
lightningnetwork.plus Academy, Voltage blog, and various other documentation sources provide learning materials.
Challenges:
- Insufficient documentation—guides are often fragmented.
- Steep learning curve—LN concepts are difficult for newcomers.
Potential Opportunities for Fiber:
- Compiling existing technical documentation into a more accessible format.
- Creating application-focused documentation and educational materials, such as step-by-step guides on building apps with Fiber that include viable business models (to educate non-technical stakeholders).
- Embedding education into the product, improving UI/UX to make onboarding more user-friendly.