Lightning Labs has announced the initial release of its new open source Lightning Network software called Lightning Loop.
Per the announcement, the software provides a non-custodial way to receive funds on the Bitcoin (BTC) scalability solution the Lightning Network through an on-chain settlement with the “Loop Out” function.
The Loop Out function attempts to solve a common issue which can affect Lightning Network users. For example, after having received a certain amount via the Lightning Network, users can sometimes not receive more until he or she moves the funds on-chain, which can now be done easily with the Loop Out feature.
Loop! There it is!!!
— Olaoluwa Osuntokun (@roasbeef) March 21, 2019
Since the solution is non-custodial, the funds can be passed on to any chosen address such as an exchange, a hot wallet, a cold wallet, or a crypto-to-fiat service. The announcement specifies that for this release, Loop Out transactions are limited to a maximum of 0.01 BTC.
New low-cost features like this could convince more (potentially fiat-pegged) commerce to accept Lightning as a form of payment. They will know that they can quickly convert funds into “fiat currency via an exchange”, whilst at the same time be able to pay any suppliers.
This would also please any Bitcoin or crypto enthusiasts who want to buy low-value items (under $10) with a zero-fee transfer of Bitcoin via a contactless payment from their smartphone.
— Nawaz – CoinRivet (@coinrivetnawaz) March 21, 2019
Submarine Swaps are atomic on-chain to off-chain swaps (and vice versa) of cryptocurrencies. Conceptualised by Lightning Labs CTO Olaoluwa Osuntokun and Lightning Labs Infrastructure Lead Alex Bosworth, they are designed to facilitate the transfer of on-chain BTC to an off-chain Lightning Network channel.
The new Loop Out feature therefore appears to be the reverse of Submarine Swaps.
Coin Rivet recently reported that Bosworth was making $25 a month from routing $10,000 worth of Lightning payments through his Lightning node.
‘Loop In’ on the way
Whilst this alpha release looks into the Loop Out feature, the announcement promises that a future “Loop In” function enabling users to move on-chain BTC into the Lightning Network will be added in the next version. This function will reportedly enable users to refill their Lightning Network channels with their own wallets or from exchanges.
The Lightning Labs team commented: “The vision for Lightning Loop is to allow users to securely move funds in and out of the Lightning Network using non-custodial Bitcoin contracts.
“With Loop, users, businesses, and routing node operators are able to keep Lightning channels open indefinitely, making the network more efficient, more stable, and cheaper to use.”