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The Lightning Lab · Jun 12, 2023

The Next Frontiers of Lightning: Taproot Assets, Nostr, and AI, Oh My! ⚡️🥕🤖

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Ryan Gentry · The Lightning Lab

Welcome to the latest edition of the Lightning Lab 🧪, a newsletter filled with Lightning Network updates, community coverage, and, of course, memes! In this issue, we discuss the next frontiers Lightning Network builders are exploring: the new Taproot Asset Protocol release, infusing Lightning payments into nostr, and giving AI agents Lightning wallets for machine-to-machine payments!

The global financial system is under an enormous amount of stress today. Those of us focused on building a new, parallel financial system are optimistic, however, because today is also the best time to start building on bitcoin and Lightning. The developer tooling and documentation has never been more extensive, the infrastructure has never been more robust, and the opportunity set has never been more appealing. Bitcoiners are building the foundation for a new, fairer, and more inclusive financial system as the old one crumbles before our eyes, the time to jump in and help us build is now!

A few weeks ago, we shipped the latest release of the Taproot Assets Protocol daemon (formerly Taro). Taproot Assets v0.2 provides the core set of features for developers looking to issue, send, receive, and discover assets on the bitcoin blockchain, currently on testnet with mainnet support coming soon. This core set of developer features consists of these flagship items:

📝 Sending and receiving with novel Virtual Partially Signed Bitcoin Transactions (vPSBTs)

🌌 Discovering and publishing assets with the initial Universe APIs

🍀 Maximum chain-space efficiency with multi-asset mints, sends, and receives

🔐 Stability and scalability improvements

We are incredibly excited to get this release into the hands of the bitcoin developer community, and to start building out this new ecosystem together! The first half of 2023 has demonstrated the latent demand from developers for issuing assets on the bitcoin blockchain, just using less efficient protocols (whose creators have even suggested that Taproot Assets “is unequivocally a better solution”). Taproot Assets provides the community with a more scalable way forward that will interoperate with the existing Lightning Network, letting developers leverage its existing network effects and install base of wallets, exchanges, and merchants, instead of needing to bootstrap a new ecosystem from scratch.

Immediately after launch, we traveled to Bitcoin Miami 2023 and heard a massive amount of demand for the new features from existing Lightning companies, bitcoin sidechain developers, and even builders brand new to the bitcoin community excited about the new possibilities. CEO Elizabeth Stark educated builders about why now is the time for bitcoin on the main stage at the conference, and about the importance of building with scalable protocols! 

Last week, the community momentum continued to build as over 100 developers joined us in a Taproot Asset Community Call! We discussed all the developer resources that were launched alongside the new release like support for the new protocol in Polar v2, the popular rapid prototyping tool for Lightning application developers from Senior Lead Frontend Engineer Jamal James, and our Tap into the Universe demo video. We laid out the roadmap to mainnet support for the new protocol, and then turned it over to the developer community to tell us what they were working on: stablecoins, web wallets, explorers, rewards-as-a-service, and much much more. 

We’ll have much more to share on this front in subsequent issues as the developer community starts shipping new products. In the meantime, CTO Laolu Osuntokun has been busy cooking up an entirely new possibility for developers looking to leverage the global reach, instant settlement, and low fees of Lightning Network payments: the Lightning <> AI convergence, with AI4All.

More on that below… ⚡️🤖

Microstrategy, the public data analytics company, hosted the first ever Lightning for Corporations event, a watershed moment for the Lightning community! Lightning Labs CEO Elizabeth Stark was a keynote speaker, joining Microstrategy CEO Michael Saylor on a fireside chat to discuss the promise of Lightning and how the many Fortune 500 companies in attendance can utilize LN applications for everyday business needs.

Microstrategy also unveiled their first Lightning product at the event, a corporate rewards app using satoshi micropayments to help incentivize employee activity. 

Voltage launched a partnership with Google Cloud, making it easier than ever to spin up a Lightning node for global, instantly settling, low fee bitcoin payments. Businesses of the world need to be asking themselves: What’s your Lightning strategy?? Because adoption is happening fast!

River, a U.S. Bitcoin and Lightning technology and financial services startup, announced a $35 million series B funding round led by Kingsway Capital. Their River Lightning Services (RLS) product is one of the easiest and most reliable ways for businesses to get onboarded to Lightning, we love to see it! 

Fedi, a U.S. based developer of community-empowering financial and data technology, raised a $17.1M Series A led by Ego Death Capital. They’re making it easier for communities around the world to run federations sharing the responsibility around custody and payments infrastructure for their circular economies, starting with the alpha release of their mobile app!

Azteco raised a $6M seed funding round led by Jack Dorsey. Azteco is growing and recently announced they’re live in Mexico with over 45k locations, Colombia with 52,000 locations, Peru with 90,000 locations and in Brazil with 126,000 locations, selling Bitcoin/Lightning vouchers for cash.

Amboss raised $4M in a seed funding round led by Stillmark for their enterprise-grade LN data analytics platform.

Ripio, the Latin American exchange, announced they’ve integrated Lightning. Their primarily emerging market users from Brazil, Argentina, Colombia, Uruguay, and Mexico can now leverage Lightning’s global reach, instant settlement, and low fees.

Lightspark, the Lightning infrastructure provider led by David Marcus, former cryptocurrency head at Meta and president at Paypal, launched their first products: Lightspark Connect, enterprise-grade automated node infrastructure for Lightning payments; Lightspark Predict for smart routing & just-in-time liquidity deployment; Lightspark SDKs and API for businesses integrating Lightning (and another SDK specific for wallets). They also released a demo of a Lightning-enabled Chrome wallet extension to showcase their SDK.  

Xapo, a Bitcoin private bank, announced they’ve integrated Lightning through a partnership with Lightspark.

Rain, Bitcoin exchange in the Middle East, Turkey, and Pakistan, integrated Lightning Network deposits and withdrawals, using Lightspark’s infrastructure. Who’s next?

Relai, the Switzerland DCA app, raised $4.5M and has Lightning integration on their roadmap for 2023. 

Trammell Venture Partners, to round out this list of funding announcements, published a research report on the bitcoin-native startup ecosystem’s early growth. This chart in particular caught our attention, showing the disparity between VC dollars invested in crypto vs. bitcoin. We expect the pendulum to swing the other way as the next frontiers of Lightning continue to be explored. 😎

  • 💰 André Neves wrote a guide explaining how to setup a paid nostr relay using the Nostream relay implementation connected to the ZBD API. Relays like nostr.milou.lol, lightningrelay.com and eden.nostr.land are currently charging a one-time fee in sats for users connecting to their relay services, while Kollider’s Nostr Relay is experimenting with a subscription-based paid relay, all on Lightning of course. 

  • 𓅦 Nostr development has been so hot that it is difficult to keep up with all the new products. A few of the “social media” nostr clients out there include Snort, Iris, Coracle, Primal, Damus, Plebstr, Nostros, Amethyst. Social Media with a Lightning incentivization model is the first nostr killer-app, but there are many other cool things being built, including other Bitcoin products using nostr as a communication layer.

Earlier this month, CTO Laolu Osuntokun, Fedi Head of Developer and Product Support Kody Low, and Craft Ventures COO and Lightning Labs Board Member Brian Murray teamed up to win 2nd place in the Craft AI Hackathon (though we all know they were the people’s champ!). Their project, AI4All, demonstrated how the popular ChatbotUI application (built by Mckay Wrigley, above) could be enhanced with Lightning payments to broaden access to a global market of users, instead of restricting it to just those with a US bank account. They even went a step further and built an autonomous agent empowered with a Lightning wallet to purchase compute cycles to actually execute the ChatbotUI user’s instructions, taking advantage of the L402 protocol to natively embed Lightning payments within HTTP. Clearly, Mckay was Lightning-pilled by the demo, there’s much more to come on this front!

Replit provides developers with a web-based Integrated Development Environment (IDE), a code collaboration platform, and cloud provider support, which has helped them grow to over 22M developers on their platform. CEO Amjad Masad has long been a supporter of bitcoin and Lightning, especially because his users are predominantly a global, young, digitally native developer audience, and his developer platform company has made itself a major hub for AI development. We’re very excited to see these two communities continue to converge, as CEO Elizabeth Stark’s vision for the Lightning Network has always been to enable “payments use cases that were previously impossible” like the automated machine-to-machine payments in AI4ALL, or Nostr zaps. 

The broader Lightning community has also hopped on this trend, with Deezy CEO Danny Diekroger releasing WebAI, an npm package that helps developers accept LN payments while building on OpenAI’s tools, Voltage VP Engineering Justin Litchfield building LNChat, a tool for Lightning node management and debugging using OpenAI’s GPT-4 model, and Oliver Offing building ChatZAP, an accountless LLM service with Lightning payments. Lightning Labs Infrastructure Engineer Jordi Montes even wrote about his vision for the Lightning <> AI Convergence, coining the term Independent Digital Agents (IDAs):

People will interact with IDAs in a similar way that a CEO interacts with strategic directives to the various departments within a company. Just as a CEO doesn't micromanage every operation, but sets high-level objectives and budget restrictions on the department, users will soon issue [those] broad directives [themselves]… I envision a vibrant economy inhabited by millions of IDAs. Much like human society, these agents will specialize, trade, and, at times, opt to purchase computational services from others instead of self-executing tasks.

If this vision of the world comes true, would it even be possible for IDAs to get a bank account? Would Visa and Mastercard be able to support their transactions? Would IDAs, and their developers, want to deal with chargebacks and fraud, or would they prefer settling with a bearer asset that makes that type of fraud obsolete? Jordi argues that they would use a native digital currency, and therefore internet-native payment rails instead:

The need for a native digital currency is paramount, and no option embodies this concept better than Bitcoin/LN. This symbiosis between AI and Bitcoin is the match made in heaven, ready to usher us into the next phase of digital evolution. As we steer towards this future, we anticipate a steep surge in Bitcoin users - and many of them may not be humans.

In this future, I see an economy bustling with Independent Digital Agents (IDAs) actively buying and selling their services and computational power.

What an exciting and provocative vision! Natively digital intelligence, natively digital markets, natively digital money and payments. The pairing of the fastest growing asset of all time, bitcoin, with the fastest growing product of all time, ChatGPT. This convergence simultaneously seems too good to be true, while making all the sense in the world. Previous attempts at machine-to-machine payments were more focused on an Internet of Things vision that never really got traction at scale. In contrast, AI products like ChatGPT and Midjourney have gone mainstream more rapidly than anybody expected, their traction is undeniable. As the market for these AI services continues to grow, it seems inevitable that the market participants will turn to bitcoin and Lightning for payments services. The good news is: we’re ready for them. ⚡️

Over the past few months, we’ve released updates for our entire product stack from LND to Taproot Assets to Terminal. First, we shipped the latest release of the Taproot Assets Protocol daemon, providing the core set of features for developers looking to issue, send, receive, and discover assets on the bitcoin blockchain. Next, we released lnd 0.16.3, which includes the major updates from v0.16 like more pathfinding flexibility, watchtower fixes, and SQLite database optionality along with fixes for increased security in higher fee environments. Further, the loopd v0.24.1 release made Autoloop easier to use whereby developers can simply set a target for their hot wallet size and provide a recurring budget, allowing for true set and forget liquidity management. In addition, Lightning Terminal now includes Autofees, an easy-to-use automatic channel routing fee management solution.

CEO Elizabeth Stark was a keynote speaker at Microstrategy’s Lightning for Corporations event, speaking on a fireside chat with Michael Saylor on the promise of Lightning. She also sat down with Thai Bitcoin evangelist Piriya at Lightningcon Vietnam to talk about the Lightning Network as the global payments layer, accessible from anywhere in the world. And at Bitcoin 2023, she discussed building Lightning-native companies on a panel moderated by MacKenzie Sigalos with Miles Suter from Cash App and David Marcus from Lightspark.

Director of Business Development Ryan Gentry moderated a panel at the same Microstrategy Lightning for Corporations event with Graham Krizek, Voltage CEO, Nick Slaney, C= Lead, and Roy Sheinfeld, Breez CEO, on the infrastructure being built for Lightning and how it works under the hood. Additionally, he spoke at Consensus Lightning-pilling their broader blockchain audience, explaining how Lightning works, its traction and giving an overview on future developments.

Head of Lightning Liquidity Alex Bosworth and Developer Advocate Hannah Rosenberg spoke on a panel at Bitcoin 2023 focused on building Lightning applications with Conor Okus from Spiral, moderated by Joe Hall from Coindesk.

Technical Writer Leo Weese gave a great talk at Lightningcon Vietnam on the usability of Lightning, from his perspective as a power user, and discussed some of Lightning’s UX problems alongside their potential solutions.

Are you a security engineer with experience in securing web, Bitcoin, and other public-facing network services, penetration testing, and both automated and manual source code security reviews? We are hiring for a Security Engineer!

Other roles include: 

Lightning Infrastructure Engineer, Senior Engineering Manager, Cryptographic Protocol Engineer

Join us in making magic internet money a reality! 🧙‍♂️

Want to get involved? Join the LND Developer Community on Slack.

Thanks for reading!

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