Magma: A New Channel Marketplace on Lightning
We’re proud to announce that Amboss is launching Magma, a peer-to-peer channel marketplace for the lightning network. When new users join lightning, the biggest questions that come up are “Where should I open a new lightning channel?” and “How can I start earning bitcoin using the lightning network?” With Magma, you’ll be able to get paid to open new lightning channels where the market needs channels: no more guesswork.
We built this to be easy: all that’s required is that you run your own lightning node. If you have bitcoin that you are willing to put on the lightning network, you can create an offer and set a price. Anyone using Magma can now view your offer and create an order for a channel. Congratulations, now you’re selling liquidity on the lightning network like a professional channelmonger. Try it out at amboss.space/magma.
Magma is a peer-to-peer marketplace for liquidity on the lightning network under Amboss’s supervision. We know that there are bad actors out there, so we’ve implemented a few simple protections to keep the marketplace safer.
Simple Smart Contracting
Those that are familiar with lightning transactions know that lightning payments happen fast and that they are final. Meanwhile, if you’ve ever sent an on-chain bitcoin transaction, you should know that you need to wait for several confirmations before it’s considered final. Interfacing between a lightning payment and an on-chain transaction means that there are opportunities to cheat. Since opening a lightning channel uses an on-chain transaction, we’ve implemented a solution to build a simple smart contract on lightning: we’re using “HODL” invoices.
Payments made to HODL invoices don’t resolve immediately into a completed payment and can be held for several hours. We’ve made it so that the person buying a channel will only pay if the purchased channel is final and confirmed with three confirmations. Amboss can act as a gatekeeper for the lightning payment without ever having custody of user funds. If the channel seller can’t open the channel in time, they won’t receive the lightning payment for the channel open and the HODL payment will be canceled. With a time limit in place, channels must be opened without delay, which results in this marketplace being very responsive to liquidity needs.
Reputation System
In addition to the invoice mechanism to protect users, we’re developing a reputation system to reward rule-following market participants and penalize those that don’t keep their promises. If you were promised a zero-fee channel and aren’t getting one, Amboss will be tracking the fee updates of the channel and reduce their earned reputation accordingly.
Repeat offenders or confirmed cheats won’t be allowed to continue participating in channel buys and sells and will have to use one of the other myriad options to get liquidity to their lightning node.
An Easy to Use, Inexpensive Marketplace
Attracting new channels has been a difficult problem, especially for new lightning users. To date, the easiest tool has been Lightning Labs’ Loop Out, which swaps between bitcoin on lightning and on-chain bitcoin. With Magma, you’ll be able to find inexpensive market pricing for new channels with an easy-to-use interface.
We’re really excited for you to try out Magma. We’ve worked tirelessly to bring you the best, but we’re just getting started. As always, reach out to us with any feedback or requests. We’re always open to new ideas!
