DeFi research on the Bitcoin Lightning network

Original title: "DeFi Research on the Bitcoin Lightning Network"

Original article by Bill,  Waterdrip Capital 

Introduction:

Bitcoin is the most mature digital currency system today. Without any middleman, users can transfer money in the Bitcoin network and realize the ability to pay for goods and services. But as a practical payment system, Bitcoin has some drawbacks. Bitcoin, for example, can only process about seven transactions per second on average, each of which takes an hour to be basically confirmed (six trust blocks); Transaction fees can be too high for Micropayments, compared with Visa, which processes 1,700 transactions per second on average and claims to be able to process 65,000 transactions per second. The Bitcoin network could change its protocol to allow more payments per second by increasing the block size or reducing the block time, but this would sacrifice Bitcoin's security and go against Bitcoin's core value proposition.

In fact, many people overlook Bitcoin's lightning network. And the development of side chains. The Lightning network represents a solution to Bitcoin's slow throughput without compromising the security of the Bitcoin network. Using the Lightning network, millions of people can send a portion of bitcoin at the same time at near-instant speed.

In theory, the Lightning network is capable of completing millions of transactions per second, far more than global payment providers such as Visa and mastercard, and the cost of Lightning transactions is very low, with no block size limit. Various applications developed based on the lightning network have gradually matured and entered the practical stage, and the lightning network of the future may activate billions or even trillions of crypto markets.

(Credit: Arcane Research)

Lightning network

The Lightning Network, first proposed by Joseph Poon and Tadge Dryja in 2015, is considered the most important innovation since Bitcoin's creation. It takes advantage of Bitcoin's security features to provide high-speed real-time transaction processing capabilities offline. Users can make direct payment through point-to-point or indirect payment through network routing. The Lightning network didn't invent new forms of encryption or use fancy bitcoin scripts, but it cleverly implemented offline payments.

First, lightning network development status

The Lightning network has had only a few niche applications since its launch in 2018. But recent developments show that this is rapidly changing. Usage of the Lightning network has increased significantly since the end of 2020, especially after the government of El Salvador endorsed bitcoin as the country's legal tender last year.

1. Steady growth of lightning network basic data

BTC  in lightning network channel; From 26 on July 1, 2018, to 1,104 on May 9, 2019, a four-fold increase in one year; From 1,058 on January 1, 2021, to 2,968 on September 30, 2021, an increase of nearly three times in nine months.

(Credit: Arcane Research)

As of October 9 this year, the cumulative capacity of the Lightning network across all channels was about 4,940 Bitcoins

(Source: Bitcoin Visuals)

At the same time, there are about 17,000 nodes operating on the network, and 85,000 channels connecting nodes from all over the world.

Lightning Network Nodes

(Source: Bitcoin Visuals)

Lightning Network Channels

(Source: Bitcoin Visuals)

Although contrast "Cross-chain   With regard to various "anchored" bitcoin of Ethereum, BSC and other chains, there is still a big gap between the scale of Lightning network and wBTC (244,400) and hBTC(12,900). However, in terms of the number of users, the development of Lightning network is still worth expecting. According to Arcane Research's statistics and estimates, just over 100,000 people worldwide used Lightning Pay last summer. By March 2022, it is estimated that more than 80 million people will be using Lightning on installed applications such as Cash APP.

(Credit: Arcane Research)

By collecting data on actual transactions, the number and amount of payments made over the lightning network can be observed to be rising rapidly. Last year, the number of payments roughly doubled and the value of payments increased by more than 400 percent.

(Credit: Arcane Research)

Two, the basic principle of lightning network

The main idea behind the Lightning network is not complicated, as Bitcoin's layert. The core of the solution is to take much of the transaction process outside the Bitcoin blockchain, with only critical links placed on the chain for confirmation.

The Lightning network uses a network of payment channels powered by smart contracts to send transactions from point to point. There are two main concepts that make up the Lightning network:

RSMC (Revocable Sequence Maturity Contract) : Revocable sequence maturity contract;

HTLC (Hashed Timelock Contract) : hashed time lock contract.

The principle of RSMC is that both parties hold an unfavorable contract under the chain (without publishing the transaction information on the chain) to record the current trading status. When renewing the status, each other hands over Revocation keys to void the previous status (because if one unilaterally reneged and placed an outdated status on the chain, the other can use the revocation keys to acquire more assets). In this process, only withdrawals are made through the blockchain. In addition, even if both parties confirm a withdrawal, the first party to make the withdrawal will arrive later than the other party, which encourages everyone to try to complete the transaction off-chain. With RSMC, a large number of intermediate transactions can be realized down the chain. (https://twitter.com/hu_zhiwei/status/1529332924679860224?s=20& t=laBZlrZvHTpmTwcOuNT9LQ, by @hu_zhiwei, with modifications)

HTLC Hash time lock contract can be understood as a limited time transfer. Through the smart contract, both parties agree that the payer will freeze (time t1) a sum of Bitcoin for payment, and the payer will generate random information R and provide the hash value H of R (H = Hash(R), R is the original image of hash H) to the payer. If within a certain time (t2, and t2 < t1), someone (node) can provide information R to the payer (making the value of R hashed match the known value H, which actually means that the payer has authorized the withdrawal of the node), then the node can get the locked bitcoins. The HTLC mechanism can be extended to multi-person payment scenarios.

(Source: lightning.network)

Based on RSMC, which guarantees that direct transactions between two people can be completed down the chain, HTLC solves the problem of cross-node transfer of bitcoin, ensuring that any transfer between two people can be completed through a payment channel. The lightning network of these two types of transactions enables any transaction between any two people to be completed down the chain.

Basis of Lightning Technology (BOLT)

The above introduces the core concept of lightning network. However, if you want to actually use lightning network, especially for project development based on lightning network, you also need a protocol to regulate it. BOLT is such a protocol in Lightning network. The BOLT specification defines a set of functions that all Lightning networking software should run in order to interoperate. BOLT includes sub-protocols at various levels, such as network connectivity, messaging, P2P, routing, and payment layers.

(source: https://blog.csdn.net/mutourend/article/details/118671063)

The above is only a general description of the technical principles of Lightning network. Readers who want to know more about Lightning network can refer to the white paper and other public materials. (https://lightning.network/lightning-network-paper.pdf)

3. Lightning network ecosystem

With the continuous iteration and development of lightning network technology, as well as the increasing number of users and funds using lightning network, more and more companies are entering the lightning network ecosystem.

(Credit: Arcane Research)

As you can see from the chart above, there is already a wealth of products and projects using the Lightning network, including node and liquidity services, payment infrastructure and merchant solutions, wallet/banking, finance and trade, and even games, podcasts, streaming media and social applications.

There are more users:

Cash App

A financial services platform that provides, in addition to banking services (provided by Cash's banking partners), Bitcoin services that can be used for payments, spending and investment, among other things. As mentioned above, in March, it was estimated that more than 80 million people were using the Bitcoin Lightning network to pay through the Cash App.

Strike

Since El Salvador made bitcoin legal tender alongside the U.S. dollar, Strike has become one of the most popular apps on the Lightning network.

However, in addition to some infrastructure, the above services are basically limited to the payment/transfer/collection functions of Bitcoin itself in the Lightning network. Although this is the largest usage scenario at present, from the standpoint of the Bitcoin network and Bitcoin ecology, Because it cannot transfer more assets (even USDT  issued on Bitcoin's Omni network) Into the lightning network, and thus does not bring other possible lines to the Bitcoin ecosystem.

OmniBOLT

To solve this problem, the OmniBOLT protocol was created. OmniBOLT can be seen as an extension of the Bitcoin Lightning network. It focuses on moving tokens faster and cheaper. It's not just focused on bitcoin, but also integrates other smart assets on the Lightning network.

Omni is an old name in the blockchain world, dating back to Mastercoin in 2012 (renamed Omni in 2015), and it's backed by the Omni Foundation. Omni's greatest contribution is to build a new money layer (Omnilayer) with new programs using existing bitcoins, at the protocol level, without changing the bitcoin base and generating alternative technologies to handle the new rules.

OmniLayer 建立在比特币之上，支持智能合约和发行 Token 等功能。加密世界中众所周知的 USDT 最早就是基于 OmniLayer 发行的。

OmniBOLT  Is the second major agreement after OmniLayer, both proposed by the Omni Foundation. OmniBOLT is also a core member of the Omni Foundation.

As mentioned above, BOLT stands for Lightning Network Technology Foundation, which is the de facto standard for lightning networks. Based on this standard, the Lightning network is compatible with Bitcoin, Litecoin (or other Bitcoin-like tokens). However, those tokens based on OmniLayer are excluded.

To solve this problem, Omni proposed the OmniBOLT protocol, which allows a range of Omni-Aware assets and stablecoins, represented by USDT, to access the Lightning network. In addition, it allows multi-link assets to interact within the onion network. With the advent of OmniBOLT, it became possible to bring all blockchain and associated digital assets through a protocol into a channel designed according to the Lightning Network specification. Through the OmniBOLT standard, it fully implements lightning network nodes that are aware of assets, and is committed to linking different public chains and ecosystems to provide a consistent interface and user environment. Its core products and standards include OBD networks in addition to the OmniBOLT protocol.

OBD network

The OBD network is actually an unmanaged OmniBOLT daemon (None-Custodial-OmniBOLT-Daemon). In OBD design, the channel is decoupled from the underlying public chain network, so as to support more public chain assets flowing into the OBD network.

OBD implements the OmniBOLT specification and is also an open source off-chain decentralized platform, built on the OmniLayer network, which implements basic multi-hop HTLC payments, multi-currency Atomic Swap and more off-chain contracts on the smart Asset Lightning network channel. In addition, OBDs are designed specifically for inbound liquidity providers. The daemon allows thousands of remote light client connections, including those from the LND wallet.

How the OmniBOLT works

1. The on-chain agreement is Omnilayer, which is the issuance and settlement layer;

OmniBOLT 本身不发行 Token 。所有 Token 均在 OmniLayer 上发行，通过 P2(W)SH 支持的通道进入 OmniBOLT 网络，锁定在主链上，可随时在 Omnilayer 主链上兑换。

2. Network protocols mainly composed of OmniBOLT include channel management peer protocol, RSMC and OmniLayer transactions, HTLC, payment routing, etc.

Note that the Bitcoin address alone is not aware of any asset information other than bitcoin. When a user transfers Omni assets to a Bitcoin address transaction channel that does not support the Omni layer, it is difficult or impossible to recover the transferred Omni assets. Therefore, the address in the OmniBOLT and its implementation must be the Omnilayer address created by Omnicore. This is why the current lnd channel cannot be an OmniBOLT channel. In the near future, the OmniBOLT will be updated to "OmniLayer Security Isolation Witness Address Format".

We understand that the OmniBOLT will also have its own nodes, which are expected to be distributed around the globe and will equal or exceed LN in number. In addition, nodes that support OmniLayer (all transaction platforms, wallets, etc., basically support OmniLayer) can also be upgraded to OmniBOLT lightning network nodes.

3. The application layer is composed of contracts for various applications, which also constitute Bitcoin   DeFi  Core applications, such as decentralized trading platform (DEX), mortgage lending platform, online store and more.

Bitcoin DeFi a project to watch

If a public chain or L2 protocol ecosystem wants to grow, its ecosystem (especially DEX) is important. Uniswap  Ethereum before and after are almost two different worlds. At present, although there are not many bitcoin-based DeFi projects, they have initially shown the outline of the construction of bitcoin DeFi territory, which is worth investors' long-term attention.

Uprets

Uprets is the DEX based on Bitcoin Lightning network technology developed by OmniLab, which is an extension of Bitcoin Lightning network. The Lightning network of Uprets is the original token channel, which can bring more assets (such as Omni-USDT, without changing to BTC) directly into the Lightning network. Users and bitcoin miners can trade bitcoin and other assets directly on the Bitcoin Omni Layer without having to switch to Sinochem's exchange platform. The project, which is supported by USDT publisher Tether, is currently in development beta, with some features already in community beta.

Taro

Taro is a new Taproott-backed protocol developed by Lightning Labs for issuing assets on the Bitcoin blockchain, enabling instant, high-volume, low-fee transactions over the Lightning network. Taro relies on Taproot, the latest update to Bitcoin, to build new tree structures that allow developers to embed arbitrary asset metadata in existing output. The core of Taro is to leverage the security and stability of the Bitcoin network and the speed, scalability and low fees of the Lightning network, which can be used with multi-hop transactions on the Lightning network. In conjunction with the new agreement, Taro announced in early April that it had closed a $70 million Series B funding round to further build its Lightning network infrastructure and help increase its headcount.

RGB

RGB is a scalable and secure smart contract system used in Bitcoin and the Lightning network. RGB is based on Peter Todd's research on one-time sealing and client verification, and was envisioned by Giacomo Zucco and the community in 2016 as a better asset issuance protocol on Bitcoin and the Lightning network. We can define RGB as a set of open source protocols that allow us to execute complex smart contracts in a scalable and confidential manner. Instead of a specific network (like Bitcoin or the Lightning network), each smart contract is simply a set of contract participants who can interact with each other over a different communication channel (the lightning network by default). RGB uses the Bitcoin blockchain as its state commitment layer, and maintains the code and data of smart contracts down the chain, thus enabling scalability.

Kollider

Kollider is a derivatives trading platform that uses the real-time settlement of the Bitcoin Lightning network. On Kollider, users can currently trade five crypto assets in fiat currency and leverage up to 100 times. This project adopts the perpetual contract mode, the temporary trading volume is not large, the community base is relatively weak.

Portal

Portal, a peer-to-peer exchange platform that uses Bitcoin's Lightning network, previously announced funding information from Coinbase  Lead the investment. The project is currently developing a cross-chain atomized trading app.

In addition to the lightning network, there are also some projects that enrich the ecosystem of bitcoin in other paths, such as through smart contracts, side chains, cross-chain protocols, etc. Among them, the relatively well-known projects are RSK, Stacks and Liquid, as well as various "cross-chain" to Ethereum, BSC and other chains of various "anchoring" Bitcoin.

RSK

我们把 RSK 理解为比特币主链的一条侧链，在无需分叉 或更改原始的比特币的前提下，通过智能合约等附加功能对其进行扩展。RSK MainNet 网络已于 2018 年 1 月初发布。智能比特币（RBTC）是 RSK 的原生 Token ，用作在 RSK 网络中执行交易的 GAS。RBTC 以 1:1 的比例与比特币挂钩（1 RBTC = 1BTC），可以通过所谓的「比特币 – RSK 桥接机制」自动在 BTC 和 RBTC 间转换，从而将比特币和 RSK 协议结合在一起。

In addition, RSK has excellent compatibility and is highly compatible with Ethereum on various levels: Executive Virtual Machine (EVM), javascript programming interface (web3), node interprocess connectivity (JSON-RPC) and Smart Contract Programming Language (Solidity). RSKVM provides additional functionality not available in EVM, and some changes to the smart contract source code are required to take advantage of these improvements. In addition, RSKVM has specific precompiled contracts that provide bridging capabilities with Bitcoin.

At present, the number of RBCTS is about 3,076, with a circulating market value of about 61 million US dollars. The RSK network Liquality integrates Rootstock and improves visibility of Bitcoin DeFi, officials said in a recent blog post.

Stacks

Stacks is another well-known side chain in the Bitcoin main chain, formerly known as Blockstack  , changed to Stacks in the fourth quarter of 2020. Unlike RSK, sports will be issued by the STX as sports a network of the native encryption currency (STX maximum supply for 1.818 billion, the current market capitalization of about $550 million). It is used to fuel bitcoin's smart contracts, reward miners on the open Stacks network, and enable holders to earn bitcoins by Stacking them.

作为比特币侧链，Stacks 通过其转移证明 (PoX) 共识机制直接与比特币区块链连接来实现这一点，该机制让矿工支付 BTC 以铸造新的 Stacks (STX) Token 。此外，STX Token 持有者还可以 stack (not stake) 他们的 Token 以赚取比特币作为奖励。

Stacks introduces a new smart contract programming language called Clarity, which is designed to be secure and easy to build due to its explicit syntax. According to its official website, there are 30 DApps running in Stacks, including Data, DAO  , DeFi, NFT  Wallet, etc.

Liquid Network(Blockstream)

Liquid Network 是由 加拿大 Blockstream 公司开发的比特币主链的一条侧链，可以实现快速以及隐私转账，也可以在该侧链上进行数字货币发行，如发行证券型 Token 和其他数字资产。

Last November, the Salvadoran government planned to issue $1 billion in "bitcoin bonds" on the Liquid Network. The bond is $1 billion in 10-year dollar-denominated bonds with a coupon rate of 6.5 percent. Half of the money raised will be used to buy Bitcoins and hold them for five years, while the rest will be used to fund Bitcoin-related construction projects. The Salvadoran government has pioneered this new form of bond issuance backed by Bitcoin as the underlying asset, and it may also become a new way to play bitcoin DeFi.

Other bitcoin side chains, such as Nomic and Impervious, have yet to be developed.

These projects are different, but they are all part of the puzzle of bitcoin DeFi, so how exactly is DeFi implemented on Bitcoin? The following takes the project Uprets developed by OmniLab as an example (Uprets is the tentative project code and may be renamed later), and analyzes the basic principles based on the Bitcoin lightning network technology DEX, as well as the prospect of the ecological development of bitcoin.

Uprets: Lightning Swap

I. Analysis of automatic Market maker (AMM) model

Uprets VS. Uniswap

The most important thing about DEX is its AMM model. I believe you are familiar with the Uniswap, Curve  Balancer  The AMM model of

AMM 模型简单来说，就是通过定义全局常量不变量，在 AMM 模型上运行，确保成交确定性和链上交易资本的有效使用。他们的智能合约持有各种 Token 对的流动性储备，交易员直接针对这些储备进行 Swap 交易。

在此模型中，价格是根据常数乘积 x*y=k 模型（或其变体）自动设置的，其中 x 是令牌 a 的数量，y 是池中令牌 B 的数量。当交易者卖出 x』 Token a 换 y』 Token B 时，池中 Token a 的数量增加， Token B 的数量减少，但产品保持不变：（x+x』）*（y-y』）=x*y=k。

Incentivize liquidity providers (LP) by charging transaction fees (typically 0.3%). This is also the underlying logic of DeFi innovation after the explosion of DeFi Summer in 2020. It can be said that the whole market rise in 2020-2021 is driven by the continuous innovation of DeFi and its derivatives.

The DEX on Bitcoin is completely different from the traditional DEX mechanism. To understand the core mechanics of Uprets' work on AMMs on Lightning networks, you need to add arbitrageurs to the model. We assume that the reader is familiar with both the Lightning Network and AMM, and omit the introduction of basic concepts. For ease of understanding, let's compare Uniswap.

1. Liquidity pool

闪电网络已经有资金通道支持多跳 HTLC 支付。由某种 Token 出资的通道形成了一个逻辑网络，在这个网络中，即使没有直接通道，Alice 也可以向 Bob 付款。支付路径上的节点提供流动性，如果支付成功，通道则会收到部分费用。参与交易的 Alice 和 Bob 通过闪电网络收付款和交易，并不会产生额外的 Gas 费用。

In Uniswap's AMM model, the liquidity provider plays a similar role: If Swap is successful, the person who deposits money into the LP pool will be paid a commission in proportion to their contribution to the flow pool. But when you make a transaction, you actually take a smart contract and pay for network Gas.

Global pool

Uprets 在 lightning network 中的资金通道形成了一个全球流动性池，不同之处在于整个 lightning network 是一个池，每个节点都维护一部分流动性，而 Uniswap AMM 使用一个合约地址来收集流动性：所有 Token 都存放在一个地址中。

Organic combination of CEX and DEX (Bitcoin version of Uniswap V3)

Conceptually, an order book is a discrete space consisting of a series of orders with a variety of prices. There must be a price difference between the highest bid and the lowest bid, and if the difference is too large, there is no deal. If the order book dex is on-chain, the market maker is usually also liable for the loss of Gas fees.

In order to obtain certainty, Uprets uses financing channels to fill the gap between all prices. Therefore, there will be a continuous space covering the entire price space. When prices move, liquidity providers have an incentive to pool liquidity around the current price in order to earn higher commissions. They withdraw the old liquidity range and submit a new liquidity range covering the current price. This hedges the liquidity sparsity of the order book model. It acts like a combination of Uniswap V3 and CEX order book.

2. Liquidity mining

After the node submits the liquidity range, it will receive a commission when it exchanges within the range. Lightning Network does not have a contract to charge commission for the liquidity provider, but uses routing protocols to enable the channel funds of the liquidity provider to be used for trading, so the channels directly earn commission.

Increase liquidity

Adding liquidity to the Lightning network is simple: just open a channel with your counterparty and fund it. lightning network discovers new channels and updates network diagrams so that your channels contribute to global payment mobility.

Removal of liquidity

撤回已签署和提交的订单和范围内的流动性，或者关闭通道并将 Token 撤回到主链。

It is important to note that BTC gas is required to finance the channel. But there is no cost to increase (eliminate) liquidity (based on the Lightning network).

3. Channel status

In a lightning network, trading, adding or removing liquidity changes the channel state

4. Run the tracker that matches the engine

When an OmniBOLT node is online, it must announce itself to the network through its connected trackers, acting as a gathering point to inform its neighbors to update their token types, number of channels, and liquidity reserves. Omnibolt applies the tracking network to register nodes and update the status of the node graph. Any tracker can be a gathering point that allows nodes to connect.

5. Cost structure

Token A 到 Token B 的交易：在 A 中支付 0.3% 的费用。该费用将在原子交换支付路径中的节点之间分摊，这意味着尽管池中有许多流动性提供者，但对于每笔交易，并非所有提供者都得到支付。跟踪器平衡了整个网络的工作负载：如果一个节点忙于处理 HTLC，则会选择另一个节点作为跳点并赚取交换费。如果流动性提供者认为他所联系的追踪者不够公平，他可以选择另一个。每个跟踪器应发布其路径/节点选择策略。而在 Uniswap 中，是通过智能合约自动分配。

6. Non-permanent loss (also known as transient loss)

The payment liquidity provider in Uprets almost never faces any losses (since the capital is only participating in the "advance" part of the arbitrage and can earn the difference).

Uniswap LP providers want to use liquidity to earn transaction fees and may incur potential losses.

The figure below shows an example of how transient losses occur and how large they are.

7. Summary

Uprets Ligntning Swap Comparison table of AMM models and UnisWap-Ligntning Swap

8. In addition, there are many advantages of Uprets (Lightning Swap) as the original transaction solution of Bitcoin networkFor example:

1) A large number of bitcoin miners /BTC holders can directly change their BTC to Omni-USDT on the Bitcoin Lightning network, so they no longer have to rely on certain CEX for transactions, expose their personal information, or even be subjected to unreasonable problems such as frozen withdrawals;

2) Instead of relying on other centralized institutions to wrap BTC into DeFi, it can directly participate in Uprets and other native DeFi(LiFi) protocols, and at the same time bring other assets into Lightning network to activate the potential huge DeFi(LiFi) market of Bitcoin network itself.

3) Two-layer calculation based on Lightning network and zkRollup, no GAS fee, low transaction slip point, fast speed, able to meet the needs of large trading and high-frequency trading.

Review and prospect

Lightning Network has now become the most popular cryptocurrency payment protocol in the world. OmniBOLT is the second major agreement proposed by the Omni Foundation, following OmniLayer.

What many people may not know is that USDT is the first blockchain application other than Bitcoin based on the Bitcoin network. Back in 2014, the first batch of USDT was born on the Bitcoin network, and several major trading platforms were officially launched around February 2015. Prior to 2018, there was only one route for USDT transfers, Omni-USDT, which was based on the Bitcoin network.

Then, as the Ethereum network became popular, the number of projects developed on Ethereum exploded, and Tether released ERC20-USDT on Ethereum in 2018. The most widely used and most widely released USDT is Tether's TRC20-USDT, launched in 2019, based on Wavefield. Although TRC20-USDT is not as secure as the USDT on Bitcoin and Ethereum networks, TRC20-USDT is widely used because of its lower transfer cost and faster speed, which better caters to the needs of the market. (After obtaining bandwidth and energy through pledge, zero-cost transfer can be achieved and the money can be received in seconds. However, when the transfer frequency exceeds the bandwidth or energy consumption, more bandwidth and energy need to be obtained through pledge or lease)

Currently, USDT has become the most widely used crypto stablecoin in the world, and also in BSC, AVAX  , EOS  And a number of blockchain network issued. Total supply currently exceeds 68.5 billion, with more than 34.1 billion TRC20-USDT and approximately 888 million Omni-USDT.

(source: https://tether.to/en/transparency)

Although Omni-USDT based on Bitcoin network was issued the earliest and enjoyed the security level of Bitcoin network, Omni-USDT also inherited the drawbacks of Bitcoin network in terms of use experience: the transfer fee is too high, the arrival time is relatively long (about 1 hour), and it is not suitable for frequent small amount transfer and payment. Thus gradually ignored by everyone, circulation is in the billions of dollars equivalent year round.

如果，Omni-USDT 能够通过 OmniBOLT 和 Uprets 无缝接入闪电网络，与 TRC20-USDT 相比，支付/转账/交易的速度更快，费用更低（无需质押 Token 带宽等资源），同时还更安全，那将会会发生什么？

事实上，在今年年初，Tether 就曾在 Twitter 上官宣，2022 年，Tether 会联合 Synonym 一起，通过 OmniBOLT 将 Token （不仅是 USDT）带入闪电网络来推动比特币经济的发展。

And in March of this year, Synonym through OmniBOLT, completed the first on the network in the currency lightning USDT stable currency trading (https://mempool.space/address/3N5YQzhGGaJMbbVSC2KTWZaqMVtZmvyoQT)

Bitcoins magazine and other media scramble to report (https://bitcoinmagazine.com/business/usdt-pilot-brings-tokens-to-bitcoin-lightning)

The OmniBOLT protocol and Uprets (Ligntnig Swap) products developed by OmniLab are expected to be available in private beta in the next month or two. If Omnilayer assets led by USDT and other public chain assets can successfully access Lightning network through it, with the security of Bitcoin network itself, convenience of Lightning network, as well as the huge asset size and good liquidity of Bitcoin network, there are now original counterparties (USDT). In the future, bitcoin transactions can no longer rely on CEX, and it is believed that the trading volume on DEX and other bitcoin DeFi will be very amazing.

In addition, from the core team of OmniBOLT, the team is using zero knowledge to prove the implementation of real smart contract on BTC/OmniBOLT. Smart contract based on payment network is another potential killer function. The more than 1 billion USDT dormant on OmniLayer will definitely be activated. After a certain period of accumulation, the number of Omni-USDT issued on the Bitcoin network may exceed the sum of USDT issued on all other chains, pushing the bitcoin DeFi and blockchain industry to a new height. In turn, more developers, communities and investors, as well as traditional businesses, are attracted to invest in Bitcoin DeFi research, innovation and construction. More complex needs are met, richer applications are released, larger assets enter the crypto field, more valuable innovations are integrated into the real world, and a real business empire is established on the Bitcoin network.

【 Reference 】

1, https://lightning.network/lightning-network-paper.pdf

2, https://arcane.no/research/reports/the-state-of-lightning

3, https://arcane.no/research/reports/the-state-of-lightning-volume-2

4, https://arcane.no/research/the-lightning-network-is-bringing-payments-back-to-bitcoin

5, https://bitcoinvisuals.com/lightning

6, https://mirror.xyz/huzhiwei.eth/J2Kv1ATWo0_d3ZidG-8BDrIJcYX7DFew_ruQ2p03sgU

7. https://omnilab.online/

8, https://github.com/omnilaboratory/OmniBOLT-spec

9, https://github.com/omnilaboratory/obd

10, https://github.com/omnilaboratory/OmniBOLT-spec/blob/master/OmniBOLT-06-Automatic-Market-Maker-and-DEX.md

11. Zou Jun, Zhang Haining. Blockchain Technology Guide [M]. Beijing: China Machine Press, 2017.220-226.

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