SLP7 – Earning Interest on Bitcoin’s Lightning Network, with Nik Bhatia

Nik Bhatia

In this episode we talk about the potential for forming capital markets on top of Bitcoin and the Lightning Network, by calculating an interest rate (LNRR – Lightning Network Reference Rate) based on the routing fees earned in staking BTC to Lightning Network payment channels. We discuss:

  • Interest with no counter party risk – why this is historically important
  • Different ways LNRR could be calculated
  • Differing levels of risk available within bitcoin (cold storage, LN staked, off-chain lending)
  • LN Interest or fees?
  • Fractional Reserve vs Full Reserve
  • Channel management and security risk
  • CFA inclusion of cryptocurrencies into course material

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