Lightning needs to align financial incentives with value provided


I'm listening to the latest episode of @podcastindex Podcasting 2.0 Lightning in a Bottle and @adamcurry is talking about issues with who will step in to manage and run the liquidity issues and routing which the Lightning network relies on.

This clip is probably the bit that explains their thinking

This got me thinking into how and why Uniswap (and other DeFi platforms like our very own @leofinance CubDefi) here on Hive have taken off like a rocket.

My own experience with UniSwap stems from the original Wrapped Hive by @fbslo. I just jumped in on that as a complete experiment. I wrapped some Hive, I paired it with ETH in what was a financially irresponsible and loss making experiment with Uni. I added $92.96 worth of liquidity as 0.119 ETH and 169.551 WHIVE to UniSwap 227 days ago. I don't even want to know what fees I paid (or even worse, how much that ETH would be worth now). I added some more a few days later with $352.13 as 0.453 ETH and 670 WHIVE. Again, the fees probably made this silly at those levels but I did it to try to get my head around DeFi.

Imagine my surprise when a few weeks later the airdrop of 400 UNI arrived and purely because of that experiment I received $4 x 400! Uni is now at $30 and I largely held it to this point having now swapped some for BNB (another great and lucky move) and Cub on CubDefi.

Mostly due to the rise in the value of UNI and ETH and various other experimental moves (and nothing to do with me understanding DeFi) I have $10k+ on Uniswap! I'm under no illusions however, Part of that windfall exists (as I understand it) because of VC money going in to Uniswap.

I've now taken some of the Uni and the knowledge and moved funds over to CubDefi on @leofinance and have a nice little farming portfolio going on.

The reason I link this with what @adamcurry said on the podcast about Lightning is that the problems with liquidity and routing will only truly be solved once there is a strong financial need to do it.

He mentioned the Satoshi's Stream service which quickly sprang up to act as a proxy wallet for podcasters who want to experiment with the Value 4 Value block payments for their Podcasts. They exist (and came into existence very quickly) because of the fee they can charge:

Withdrawal fee is 3% for the service + 1 % to PodcastIndex for a total of 4%

That seems fair to me and good luck to them.

As we know here on Hive, when you manage to correctly align needs and financial incentives, all sorts of good stuff happens organically. The forthcoming WhitePaper from @threespeak I believe is going to lay this out very well for their very broad vision of a massive content storage and delivery platform.

I haven't got deep into Lightning yet, I'm probably going to pick up a Raspberry Pi 4 next week and try to set up my own node, but I don't see enough financial incentive to lock in the kind of capital we're going to need if it really serves as the basis of Podcasting 2.0's streaming value system. That's not to say they can't do it, but there's going to need to be a laser focus on making that happen.

The second part of Lightning Network that seems to need work is the manual labour of opening and balancing channels. This seems to be a long way from being automated. This skill and labour will need to be rewarded.

I may have many misconceptions and would love to hear from experts on the Lightning Network about those. Please let me know if I've homed in on the issues or I'm missing the point!