2 years ago
- Amboss Technologies is launching Magma, a caller marketplace for buying and selling liquidity connected the Lightning Network.
- Magma uses a caller “HODL” invoice that awaits 3 on-chain confirmations earlier completing the acquisition of a channel.
- The marketplace volition besides way reputation, removing repetition offenders and confirmed cheaters.
Lightning Network startup Amboss Technologies is launching Magma, a peer-to-peer (P2P) liquidity marketplace for Bitcoin’s Lightning Network, per a property merchandise sent to Bitcoin Magazine.
Amboss noted that portion liquidity marketplaces are not new, the institution has integrated a suite of features to supply a unsocial offering, including a caller astute declaration setup and a estimation feature.
Why Liquidity?
Liquidity is an indispensable facet of managing a Lightning Network node and its channels. Its peers’ inbound capacities volition find however overmuch bitcoin they tin receive, and their outbound capacities volition find however overmuch bitcoin they tin send.
Users tin get outbound capableness by opening a transmission with different adjacent connected the network, but successful bid to person Lightning transactions, 1 needs to get inbound capacity. But a tricky portion of managing Lightning liquidity is however to rapidly find caller inbound capableness to support your concern receiving lightning web payments. This is wherever liquidity marketplaces travel in.
Liquidity marketplaces question to amended connection astir wherever liquidity is needed successful the Lightning Network. Market pricing accusation tin assistance participants with immoderate other bitcoin marque the champion determination astir wherever their liquidity is needed (and get paid for it).
In bid for a P2P marketplace to function, channels betwixt participants request to person funds deposited successful the transmission that tin beryllium transacted backmost and forth. Payments successful the Lightning Network tin travel some ways. It’s trading the aforesaid funds implicit and over, alternatively than trying to participate caller funds into the ecosystem for each purchase, that allows the marketplace to relation without a cardinal authorization providing liquidity.
However, a occupation emerges erstwhile a purchaser signals their request for liquidity.
"Opening a lightning transmission to supply liquidity uses a modular bitcoin transaction, which requires aggregate confirmations earlier the outgo is considered final. For Lightning, this process is astir instantaneous.
This mismatch betwixt confirmation times with on-chain and Lightning transactions creates a infinitesimal in-between a Lightning transaction and its corresponding on-chain confirmation that allows users to “cheat” the strategy – a spread Magma seeks to fill.
The “HODL” Invoice
Magma aims to support users purchasing liquidity connected the level done a caller astute declaration setup it calls a HODL invoice, which prevents a outgo from being instantly resolved by waiting for 3 confirmations connected the Bitcoin blockchain. As a result, the model of clip that an attacker could exploit is removed.
This functionality allows Amboss to relation arsenic a gatekeeper without requiring immoderate custody of funds connected either broadside of the transaction. If the lawsuit selling liquidity does not make the transmission successful time, they volition not person the Lightning outgo arsenic the declaration gets canceled.
The clip bounds request creates a highly-responsive liquidity market, but Amboss took it 1 measurement further and implemented different protective measure.
Reputation
Amboss volition besides make a estimation strategy connected Magma to assistance guarantee the integrity of the marketplace, rewarding marketplace participants who travel the rules and penalizing those who manipulate the system.
If a user purchased a transmission that for immoderate crushed did not resolve, Amboss volition way the interest updates and update the estimation of the seller. Repeated maltreatment of the strategy oregon confirmations of cheating could effect successful expulsion from the Magma marketplace which would necessitate atrocious actors to usage different transmission for liquidity needs.
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