How to let someone use my BTC without gving out control? \ stacker news ~lightning

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How to let someone use my BTC without gving out control?

1305 sats \ 16 comments \ @south_korea_ln 17 Jan lightning

zaps forwarded to @FreeRoutingAf (50%)

I recently got in touch with an LN liquidity provider who is looking for additional BTC (with a 1% APY). As we were discussing how to provide this liquidity to them (not being a node runner myself anymore), the simplest option of course is to hand over the BTC to them and trust them to give it back and not mess it up managing their LN nodes. That's a lot of trust. Other than their online presence on social media, I don't know them.

The other option they mentioned would be to use a service called https://vls.tech/. Has anyone used this service?

Can you think of any other solution that would allow me to let them use my BTC without me having to give over control?

EDIT: The liquidity provider is Free Africa Routing (@FreeRoutingAf). I've added them.

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231 sats \ 1 reply \ @fm 17 Jan

You seriously think of risking your btc for a 1% ?

Go earn money somewhere else and sleep by night..

0 sats \ 0 replies \ @south_korea_ln OP 17 Jan

I am thinking of ways to (i) support a project I value and (ii) how to do that by minimizing risk. vls.tech seems to be something that allows me to keep control over my keys while letting them use it. I would basically have to sign off on any transaction.

It's not about the money here. If it were that, I'd go back to the 12% APY I was getting during the prime of my LN routing node experience.

In the end, this post is more about learning about other similar services as vls.tech that would allow me to take the same risk as when running a node, while not having to run a node.

110 sats \ 1 reply \ @TheBTCManual 17 Jan

Short of CTV and opvault which we ain't getting any time soon, probably not and we can't solve everything trustlessly, you can try VLS but you will still need to be involved, so if you're fine with that, signing when needed sure

For everything else there's the legal system, draw up a contract

I honestly don't think a 1% APY in the current climate is worth the headache though but to each their own

0 sats \ 0 replies \ @south_korea_ln OP 17 Jan

How would that work with CTV and opvault? Got a link for this (or similar) usecase?

110 sats \ 1 reply \ @SqNr65 17 Jan

You're lending money here, which means what you have to manage is risk.

The traditional solution to this, and what makes the most sense to me, is to assess how much risk you're willing to take on, and put a price on it.

You have a borrower, you need to assess their creditworthiness on your own terms. People with low creditworthiness get loans at a higher APR than people with high creditworthiness.

You may not be running your own node, but you are acting as a bank. So embrace it. Charge for your services, and do so at a price that makes the trade worth it for you. You're in the risk management business now. It's tricky to price, but make sure that the risk of default and the psychic cost of taking on that much risk is covered by the fee you charge. If 1% isn't worth it to you then it's not worth it to you. Either negotiate the price up or decline the transaction.

In short, don't "hand over" your Bitcoin. Sell your liquidity at a price that makes it worth it for you.

0 sats \ 0 replies \ @south_korea_ln OP 17 Jan

Thanks for your reasoned answer. Let's see if there are more ways to emulate running a node (where you are still in control of your bitcoin) while not having to run an actual node. By definition, this will be hard as that's exactly what BTC solved and LN by extension by leveraging BTC security and game theory forcing actors to act honestly (or be penalized greatly for not doing it).

110 sats \ 2 replies \ @oliverweiss 17 Jan

I can’t help with that, only recommend not to go the “trust us” path. There is another way how to take advantage of your Bitcoins without loosing them, but haven’t tried it myself. https://hackyourself.io/product/how-to-harness-the-value-of-bitcoin-without-having-to-sell-it-ebook-mini-course/. The dude is asking 60 euros for the course, but maybe there are SN-guys having experience with such things and could direct you and us to better resources. So take the link as a first step for further research.

2 sats \ 1 reply \ @south_korea_ln OP 17 Jan

Thanks for the link, but not going to pay 60 Euro to a shitcoiner ;)

0 sats \ 0 replies \ @oliverweiss 17 Jan

Fair enough.

0 sats \ 0 replies \ @netstatic 17 Jan

I don't understand how VLS solves anything. It's a library that needs to be integrated with another lightning client. It's only applicable if you are the sole owner of your channel. One counterparty using multisig in a lightning channel is not supported in VLS or any lightning client for that matter. If they want you to be an LSP for them, then that's a different story. You can do that without trusting them but if that were the case, you wouldn't have any obligation to pay them.

0 sats \ 0 replies \ @9 17 Jan

Just leave your BTC in cold storage and go find another hobby.

0 sats \ 0 replies \ @mo 17 Jan

you still have the option of setup @supertestnet's LoanShark on your end and ask for a bond/collateral. in case they don't pay the loan, you can still claim the collateral back.

I agree a legal contract maybe required depending on the agreement

0 sats \ 0 replies \ @endothermicdev 17 Jan

VLS is an incredible project, but not a silver bullet in this case. It's going to add significant latency - routing will be severely hindered if the signer is not colocated with the node. Even with VLS there are still ways to screw up a node and lose funds.