b0xxer/web
1
0
Fork 0
Code Issues Pull Requests Packages Projects Releases Wiki Activity

Update docs/liquid/liquid-part3.md

Browse Source
This commit is contained in:
b0xxer 2024-02-07 07:15:04 -06:00
parent 703e630396
commit a4a022a442
1 changed files with 16 additions and 9 deletions
Show Stats Download Patch File Download Diff File Expand all files Collapse all files

25
docs/liquid/liquid-part3.md
View File

@ -121,19 +121,21 @@ By using one of the above concepts, this means AMP can be used in the following
A full demo of the security features would require their own DeepDive (hint hint). If you would like to read more or see tutorials you can visit [Liquid docs website](https://docs.liquid.net/docs/blockstream-amp-api-tutorial-in-python)
## Lightning Integration
Integration of Liquid with BTC-LN is a hot topic these days. There are multiple different services using this approach as a way to reduce XXX
**Yes, probably one of the best ways to do that is to use it as a *staging area* for opening Lightning channels**. (In fact, both Blockstream Green and the newly announced AQUA both do that under-the-hood[^5]).
What if you have no interest in issuing assets on Liquid, can it still be useful?
Ignoring inbound liquidity issues, lets just look at current pain points in setting up outbound LN channels:
Yes. The integration of Liquid with Lightning is a hot topic these days. There are multiple different services using this approach as a way to reduce fees for channel opening and rebalancing.
Probably one of the best ways to do that is to use it as a *staging area* for opening Lightning channels. (In fact, both Blockstream Green and the newly announced AQUA both do that under-the-hood[^5]).
A summary of the pain points in setting up LN channels currently are:
* High fees to open / close
* High fees then force larger minimums for open / close
* Higher channel sizes then increases risk
* Higher channel sizes then increases risk in hot wallet
Looking at this with regard to current fees illustrates the problem pretty clearly.
| | Channel Open Size | Total Fee (sats) | Effective Cost-Basis |
| | Channel Size | Total Fee (sats) | Effective Cost-Basis |
|-|-------------------|------------------|----------------------|
|BTC | 10,000 sat | ~ 12,500 sat | > 100% (NOT POSSIBLE) |
| | 20,000 sat | ~ 12,500 sat | 62.5% |
@ -141,6 +143,11 @@ Looking at this with regard to current fees illustrates the problem pretty clear
| | 100,000 sat | ~ 12,500 sat | 12.5% |
| | 200,000 sat | ~ 12,500 sat | 6.25% |
| | 500,000 sat | ~ 12,500 sat | 2.5% |
By using Liquid we can reduce these fees drastically:
| | Channel Size | Total Fee (sats) | Effective Cost-Basis |
|-|-------------------|------------------|----------------------|
| L-BTC| 10,000 sat | ~ 158 sat | 1.5% |
| | 20,000 sat | ~ 168 sat | 0.8% |
| | 50,000 sat | ~ 198 sat | 0.4% |
@ -152,9 +159,9 @@ You can see that it is *much cheaper* to use L-BTC. In fact its so cheap that it
The ability to open **small + cheap channels** really changes the game. You can choose to keep your funds safely in Liquid UTXOs and then deploy into LN as needed.
Something like this:
This approach encourages you to keep the bulk of your money in BTC and then commit a *staging portion* of funds in L-BTC. From that L-BTC, you can then cheaply open channels as small as 20k and pay less than 200 sats to do that (for reference, currently that would equate to paying .08 to open a $8.50 channel)
![](part3-liquidselfuse.png)
[BTCSessions did a great video/review](https://www.youtube.com/watch?v=5kNMJd-Ts2c) of how to use Liquid as a way to very cheaply onboard from fiat as cheap as possible.
## Pegging Out
@ -240,7 +247,7 @@ In theory, you should now have your own federation on your very own sidechain.
[^2]: Atomic Swaps allow parties to exchange different tokens directly without the need for a 3rd party, eliminating most of the risk of fraud and counterparty default.In fact, Blockstream has a tool to simplify using it.
[^3]: Please `git clone` the repo and don't rely on the pre-compiled downloads in repo (they are out of date from source)
[^4]: You can specify to individual wallets in the swap-tool URL connect string by using the `http://user:password@localhost:7041/wallet/walletname` syntax
[^5]: They are using services like Boltz, which allows you to open Lightning Channels with L-BTC. NOTE: [BTCSessions did a great video/review](https://www.youtube.com/watch?v=5kNMJd-Ts2c) of how to use Liquid as a way to very cheaply onboard from fiat as cheap as possible. Summary is Fiat -> CEX -> BTC -> Liquid -> Boltz -> LN. Obviously if your CEX has a LN withdrawal option you don't need all these steps!)
[^5]: They are using services like Boltz, Sideswap.io, and PeerSwap technology, which allows you to open Lightning Channels with L-BTC.
[^6]: Right now fee rate is quite low at 30vb/sat, this figure could easily double or triple!
[^7]: Its worth noting that the Liquid Federation members - as a group - tends to be a collection the most pro-bitcoin focused companies in the ecosystem.
[^8]: [https://github.com/ElementsProject/elements/blob/master/README.md](https://github.com/ElementsProject/elements/blob/master/README.md)