41 sats \ 8 replies \ @Martin 15 May 2022 \ on: Daily discussion thread
What do you guys think is the reason / reasons that same exchange are taking forever to integrate lightning onto their platforms?
LN is not so easy to integrate for an exchange.
Do you run a LN node? If you run it you will understand how hard it is to manage and keep a good level of inbound/outbound liquidity.
Is all about liquidity and how you manage it.
Exchanges mostly they will have more outbound transactions (people withdraw through LN). In order to achieve this, they will need to open a bunch of big channels with good other nodes, so they can send fast , reliable and cheap all those withdrawals.
Users that want to sell their BTC (losers), usually will use onchain to deposit, so the exchange will not need too much inbound liquidity.
This is a very good question btw.
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I think it's simple.
Exchanges, on average, are just like every other business - they respond to the demand from users. Right now, the user-count of lightning is measured in 1000s or 10000s and those users have small amounts of capital on LN compared to their main stack.
It's too low to justify business-investment -- they will only get some fraction of LN's users.
Classic Chicken-Egg. Now, a few exchanges take the leap, and then start seeing growth, then users demand it from the competition.
Look at deribit.com. They were a BTC-only platform for forever. Then once demand existed for Ethereum, they added that. Now, it's an explosion of shit-coin derivatives and you can't count all the junk they've added to trade. Why would they focus on junk instead of LN? Perceived or actual user-demand. Plain and simple.
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Nonsense. It's for the same reason that explains why Binance charges like $30 to withdraw in bitcoin. That gives you an incentive to trade into a shitcoin. Binance gets the BTC/LTC trading fees and liquidity for LTC sellers.
You pay three times -- trades BTC for shitcoin (e.g., LTC) on Binance, then pay a (small) fee to withdraw the LTC (e.g., to Kraken), then let's say you then convert LTC to USD there (third fee you pay), and then withdraw the USD.
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I hear you, but that's just one exchange. I was speaking in general terms.
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I need lightning and no KYC. The latter being more important than the former.
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Nonsense. It's the same reason why Binance charges like $30 to withdraw in bitcoin. That gives you an incentive to trade in to a shitcoin. Binance gets the trading fees. You pay three times -- trades BTC for shitcoin (e.g., LTC) on Binance, then pay a (small) fee to withdraw the LTC (e.g., to Kraken), then let's say you then convert LTC to USD there (third fee you pay), and then withdraw the USD.
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It's not security. They allow failed projects like luna and failed smart contracts.
For me is fees and limit users ability to buy/sell. They can foresee what users are trying to do when because they can check the Blockchain. With lightning there is no Blockchain, just an amount of money arriving suddenly.
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My guess is that its a chicken and egg thing. But also they make alot of money from people trading altcoins, and a big reason altcoins exist is because bitcoin is percieved as "incomplete". Adding the LN support will make Bitcoin seem more complete, and could make interest in altcoins fade a little, which is not in exchanges immediate interest so far it seems.
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