Recently, non-custodial wallets such as Nayuta wallet, 10101 and Mutiny have come out publicly to say that they will close their operations, and in the recent episode of Kraken closing payments via Lightning, due to MiCa regulations.
Because of this, I was wondering if Lightning is going through regulatory pressure or if there are other factors, which I am unaware of.
So, let's look at some points:
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What these wallets have in common are the LSPs that they need to use, such as Voltage or their own setup, such as what happened with 10101 and Nayuta.
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In the case of Mutiny and 10101, they used LDK, while Nayuta used LND.
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Wallets need companies that are susceptible to regulations, very different from FOSS projects such as Zeus and Electrum.
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We need more LSPs, even if they are in small nodes, thus managing liquidity.
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What caught my attention in the Nayuta wallet announcement is "The Lightning Network, which was initially developed for real-time payments of “decentralized money,” has currently evolved into a business landscape where currently custodial LN solutions are taking center stage." This is still a reality, the vast majority of wallets are centralizing and becoming custodial, bringing risk to the user and developers.
Conclusion
We need to decentralize LSPs, in the sense of accepting small nodes, anyone can be one by following the Darthcoin guide and thus promoting decentralization, payments and much more.