STEMr42

bitcoin

Lyn Alden on the Lightning Network, Stablecoins, and Nation-State Bitcoin Adoption

Great conversation. I like Lyn’s views on utility vs speculation. It seems like LN is delivering on some of the early utility promises of Bitcoin. 

RIP Zion V1 Nodes

Initially yes, but this was changed to DID and DWN. There is still a lot of interest in Nostr and ways to be compatible but it likely wont be at launch. 

Some thoughts from my experience with Zion. 

In case you missed it, the current social media platform model is broken.  Creators own nothing.  Tech companies control everything – including who/what people can see.  Bots, scammers, and propaganda armies seem to outnumber actual users.  It doesn’t matter who owns the platform, the model is the problem.   Bitcoin’s Lightning Network can help fix this.  Sphinx has done a great job at demonstrating a new model with LN integration.  Zion V1 was a fork of Sphinx with a vision, and marketing, for scale.  Zion is intended to be a decentralized, censorship resistant, social app where creators own their content and spam/bots are economically disincentivized. LN nodes and pubkeys are the backbone of this model.  This model is based on building messaging into LN payments. Every message is sent as a data package in a keysend payment. Users are not just a line in a database, they are an LN pubkey.  Which means all users need a node. Now scale that to 100,000 users. Or to 1,000,000 users. Users that are new to Bitcoin/LN. Users that don’t know what a sat is, let alone a node or a channel.  It doesn’t work.  Not at scale.  Not for onboarding millions. Not with the current tooling.  

When the boss says we need to onboard this waiting list, let’s add 1,000 users this week.  How do you actually do that?  You don’t just create a db entry.  Ship out 1,000 Pis with Umbrel installed?  Ask customers to buy their own node? This would be the most decentralized way. And is likely how most Sphinx users access the app.  They run nodes themselves.  They spend the money and take the time to learn.  Which is great.  Sphinx has built a great product. I did this myself.  And then I wanted to onboard my family and friends.  Errrr? Buy a what? For why?

The simplest model for onboarding new users is a model where Zion provides the node and liquidity management to remove much of the LN friction (Sphinx also has a limited version of this).  Yes, this has tradeoffs.  The user simply pays a monthly fee for a social media app.  The actual product though, consists of a Voltage hosted LND node, a 50k sat channel with 4k given to the user, routing/liquidity management from the Zion routing nodes, Zion relay software, and a social media app.  To them, it’s just a social media app that they have to pay a monthly fee for.  Which is the intent - try to abstract all the LN away. But it’s certainly not the simplest for Zion.  Now you’re tasked to spin up 1,000 hosted nodes.  That’s 1,000 LND servers w/ Zion relay software installed and an open channel with sats pushed. Well, Ok, so...what’s mempool look like? Do I wait for low fees?  What does my UTXO set look like?  Do I need to wait on change confirms?  Can I batch open? How may can I cram into one batch?  But that’s just the beginning.  You also have to track and maintain all the nodes and liquidity.  Which customers have which nodes? Is LND running? Is the wallet ready for RPC calls? Is the channel active? Is the relay software running?  Is there liquidity? What if the channel is force closed by LND force close gremlins? What if a user needs more capacity?  Are payments failing or succeeding?  What happens to the node when a user cancels? There are many great open-source tools available for LND, but which of these is made to handle these issues at scale?  I’ve broken most trying to run them against 7 routing nodes with over 3,000 channels.  So, it’s roll your own liquidity and customer management software.  All of this takes resources.  Resources that have costs. Costs that have to be paid by someone, and there’s no advertisers to pick up the costs in this model.  So the customer has to pay a fee for a social media app.

Of course, a customer’s first question is, “Why do I have to pay for this when InstaFaceChatTerTokGram is free?”.  They don’t see all the resources put into their “account”. Some will accept that there is a cost (financial, technical knowledge, UX/UI friction) to privacy and decentralization. Some understand the customer/product relationship of centralized social and are willing to pay a fee to move away from that model.  But many will not. And even if a million people were willing to pay right now, how many properly managed nodes can realistically be spun up every week?  While there is promising development work being done for nodes/liquidity at scale, we just aren’t there yet.
So, after spinning up over 3,500 LN nodes for over 3,000 users, Zion is transitioning to a new model. We’ve closed 3,500 nodes and channels – and this stings a bit, like tearing down a house you just built (also, what’s a liquidity manager to do with no nodes?).  But it’s the right way forward for scale.  Zion V2 will be built with LN, not on LN. To be fair, this is similar to other services using LN.  Every Strike user doesn’t have a node.  Every Fountain user doesn’t have a node. V2 will use Decentralized IDs (DIDs) for identity, and Decentralized Web Nodes (DWNs) for content, and offer more solutions for LN wallet integration. This will allow more flexibility in pricing, including a free option, and move closer to the creator owned decentralized vision of the founder.  This is a complete stack re-design with new protocols on top of new protocols.  It certainly has its challenges – and delays.  This is also one of several social projects looking at decentralization and LN integration. I hope they all succeed, and I hope LN’s decentralized global payments can finally put an end to ad driven business models and give control and ownership back to the users.