Lightning Labs, the startup spearheading development of the lnd Lightning Network client, today announced[1] a $10 million Series A funding round, led by Craft Ventures. Accompanying the announcement, Lightning Labs also released[2] its Lightning Loop[3] service in beta, marking the company’s first commercial service to help resolve Lightning liquidity bottlenecks.
“I think this funding round is another confirmation that the Lightning Network is getting real,” Lightning Labs Co-Founder and CEO Elizabeth Stark told Bitcoin Magazine. “Our first lnd beta was released less than two years ago, and by now a whole new crop of startups that didn’t even exist yet is building on top of the infrastructure that we provide.”
Lightning Loop
Since lnd was the first Lightning implementation released[4] in beta in March 2018, Lightning Network growth has exploded. Publicly available data[5] reveals that Bitcoin’s overlay network for fast and cheap payments today consists of over 11,000 nodes, sharing almost 36,000 payment channels, together holding more than 870 bitcoin (worth about $8 million at the time of writing). Estimates[6] suggest that private channels add between 35 to 40 percent to these numbers.
One remaining challenge on the Lightning Network is channel liquidity. In contrast to regular, on-chain Bitcoin payments, Lightning users can only make or receive payments if they have sufficient funds locked up on the right side of their payment channels. If a user (say, a merchant) mostly receives payments, funds in his channels can quickly accumulate on his end — making him unable to receive more payments through his existing channels. Vice versa, a user that mostly sends payments can find his side of the channels depleted,
