Amboss’ new Lightning Network Rate (Liner) simplifies the process of generating yield on Bitcoin’s Lightning Network by providing key insights into yield opportunities. According to Jesse Shrader, CEO and co-founder of Amboss, “Liner is a way to generate yield without giving up custody.” This means that users can generate returns on their committed funds without having to trust another platform to hold them.
Liner will be the benchmark rate for measuring bitcoin returns on committed capital on Amboss’ liquidity marketplace Magma. It will allow liquidity providers to determine whether committing their capital will be worth their while, and purchasers of liquidity will be able to determine the cost of leasing channel capacity. Magma currently shows yields ranging from roughly 2% to 3%, and these are what Shrader calls “self-custodial yields,” meaning returns are only generated from the provisioning of liquidity without any bitcoin changing hands.
Lightning infrastructure firm Lightning Labs launched Lightning Pool in 2020, which also generates a “current lease rate” for capital similar to Liner. According to author and investor Jonathan Bier’s book Reckless: The Story Of Cryptocurrency Interest Rates, Lightning Pool had double the volume of Magma circa November 2022.