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Token Daily Newsletter #24


From the Archives
A Lightning Retail Case Study: Bitrefill 


In May 2019, we sat down with the Bitrefill team to internally learn more about Lightning retail adoption. Now that the year's winding down, we are releasing some of the highlights from that conversation.

1. Challenges in accepting / maintaining Lightning node and channels as a retail business

Bitrefill team: Node issues when scaling up. Few to no other services have as many channels as we do so we often run into new performance issues which we report to Lightning developers. This has been less of an issue lately, and we have redundant nodes running different implementations for fallback.

Getting users Lightning wallets. Accessibility and ease of use are major challenges, there are no non-custodial Lightning wallets live on iOS (at time of writing). There are custodial wallets on iOS/Android that are rough on the edges but generally work. 

Other challenges include removing liquidity off of our node. This is also amplified by us having a channel opening service to help other retail businesses and user receive payments of Lightning easily (Lightning torch as an example).


2. Fee economics around your node

Bitrefill team: It's useful for us to accept incoming payments and not need to do consolidation of lots of utxos - which is expensive on chains like BTC and ETH. We have some earnings from selling Thor channels.

We charge higher fees than most to route, but not much higher. Future improvement include charging less fees for widely unbalanced channels that are dynamic. Other plans include closing channels that aren’t used in x time.

We avoid small channels opened to us to avoid on chain fees for consolidation. Small channels also earn less fees and are less likely to have any routing activity, meaning they can carry a liquidity cost. Those users can currently connect to routing nodes run by volunteers or wallets, or use our premium Thor service to have a channel with us. 

Thor can be easiest thought of as an ISP for Lightning channel capacity - it connects your home node to the monetary superhighway network that is LN


3. How much volume (or percentage of volume) are you seeing via Lightning 

Bitrefill team: At time of writing, Lightning payments are currently at 5% of unique payments received by us, growing at ~35% monthly. In EUR amounts it's less than 5% because Lightning transactions are currently capped in size, so the average transaction size is lower than other payment methods.

The % of tx happening with Lightning is on the same order of magnitude as we see with Ethereum which is the largest of our supported altcoins. 


4. What are support requests you're seeing with Lightning 

Bitrefill team: Not as many as one might think. We do have Lightning support issues with wallet bugs sending payments after expiration or bugs in lightning implementations but issues have been almost non-existent lately. Majority of requests are users wanting to use our Thor product with wallets that have not added support yet.

We have vastly more more support requests with altcoins paying partial amounts or even with regular bitcoin. We do have users once in a while have issues being unable to pay us due to routing issues, but that’s more on them not opening channels with nodes that can send to us. Lightning Labs is working on improving this by having nodes connect and open channels to nodes that score high on their routing metrics.
 
      

🔮 The Token Daily 2020 Crystal Ball

We compiled predictions on what to expect in crypto during the new year from some of your favorite builders and investors in the space. Read their takes in our 2020 Token Daily Crystal Ball post.
 
 
      

IN BITCOIN

⚡️ Why Bitcoin Mining is Being Touted as a Solution to Gas Flaring

A look at the creative ways bitcoin companies are solving an age-old environmental and economic problem for the oil and gas industry.


      

IN ETHEREUM

🔹  The Newest Adition to DeFi: Payroll on Ethereum

Every day DeFi is inching closer to mainstream use cases. This weak, Sablier hit the bull's eye with their product launch. The product facilitates payroll services on Ethereum using Dai, USDC or even Compound's cDai. The payment recurrence can be set to any arbitrary period of time. Using something like cDai as the payment currency allows employees to accumulate real-time interest until they decide to spend their salary. 

🔹  MakerDAO Governance Attack


DAOs are picking up steam as decentralized governance systems. Still, DAOs have significant risks. A viral post this week detailed how to execute a governance attack on MakerDAO that would allow the attacker to steal all funds locked in Maker (> $340M) by just using ~ $20M. The attack is centered around the 0-sec delay between a vote result and the execution of the vote outcome. In response to the post, the Maker Foundation pushed forward a governance vote to activate the Governance Security Module (GSM) that changes this delay from 0 sec to 24 hours. The vote is currently active, make sure to participate.

 
      

OTHER TOPICS

 

The Smart-Contract Platforms Seesaw

"Smart-contract platform" is, by far, the most dominant category of newly launched and soon-to-be-launched blockchain projects. Tezos, Algorand, Nervos, Kadena, Dfinity, Polkadot, Celo, and many others support smart contracts and try to differentiate their respective projects through consensus mechanisms, scalability, use cases, or monetary policy. As all of these platforms compete against Ethereum and older Ethereum competitors like EOS, we'll see wildly fluctuating behavior. Some projects will soar when their side of the seesaw rises, and slam into the ground when it begins to fall. In this regard, it isn't surprising to find that as EOS crumbles under its own problems, we've observed a quick price increase in a competing token; XTZ.  Though there isn't strong evidence to support this observation, it may be an early indicator that speculators are moving their bets from a troubled horse onto a fresh new-comer. 
 

Percentage Change in EOS, XTZ price in the last 3 months



Filecoin Commits to Schedule and Launches its Testnet 

After significant delays, the Filecoin testnet is finally here. Filecoin is one of the most anticipated projects as it promises to change the way online data storage is used. The project raised more than $250M in September 2017 which was the ICO record at that time. 


🍕 Listen to The First Episode of The DePiance Podcast

Our friends who get crypto and love pizza launched a special podcast for Decentralized Pizza (DePi). Make sure to tune in to listen to the first episode here

 
      

Disclosure: Token Daily Capital and/or its partners may have exposure to some of the cryptocurrencies mentioned in this newsletter.

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