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164 sats \ 11 replies \ @SimpleStacker 29 May \ parent \ on: CashApp is making nearly 10% APR (aka yield) on its bitcoin via lightning lightning
10% yield seems pretty high for a node, since the average fee rate is about 0.1%. So to get a 10%/year yield from routing, you'd have to turn over your entire channel capacity 100 times per year? I guess that's possible
Back when I was still running my node, I was at 12% APY when I was providing liquidity to LOOP. From what I gather from the related Telegram groups, this seems to be still quite a profitable endeavour. My largest channels would be depleted several times per day.
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Size matters for sure. Not sure about the current status, but at the time, below 1 or 2M sats per channel, it didn't make much sense. For LOOP, I think I had 10M channels, at the very least. Probably more, but I don't remember the details.
One of the reasons I stopped is that I felt I was playing outside of my league. I had too much capital locked in those hot wallets, and I grew too fast, too quickly. Some hardware and software problems reeled me back in, and I never got around to doing it again, at least not as a routing node. To do it properly, what matters is size. So unless you own disposable Bitcoin at the 1+ BTC unit level, you're likely not going to reach this kind of APYs.
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According to Alex Bosworth, some people route at 4000ppm with LOOP. Even used to be 7000 pm at some point. 0.4 and 0.7%, respectively. You can see it accumulates quickly if you do it several times per day.
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That is only attractive on the surface. Your other channels will quickly become 100% local balance, so you will have to constantly source inbound liquidity. That is too much work and annoys peers if you constantly close their channels. That is why I don't do it.
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Yeah, that's indeed not the full picture i gave.
I had however managed the rather pleasant scenario where people would just keep opening channels with me basically becoming the N-2 node towards LOOP. As i would very actively rebalance, they could set high ppm towards me and profit down the river. I ended up with 3 to 1 rate in terms of inbound versus my outbound. It happened naturally without me looking for extra inbound. People would just tell other people to open with me and they'd profit.
That was a few years back, so not sure how it works now.
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