This is the first bitcoin derivatives exchange built on Lightning Network which, in order to carry the project forward, has organized a financing round in collaboration with Bitfinex.
Arcane Crypto, which develops and invests in projects focused on bitcoin and digital assets, and Fulgur Ventures, investor in start-ups, Bitcoin and applications that exploit Lightning Network.
Taking advantage of Lightning Network’s unique features, LN Markets allows traders to instantly trade their funds and execute transactions directly to or from their own wallets, without constraints or delays.
In addition, it uses the scalability of this second level on the Bitcoin network in order to obtain instant and highly cost-efficient transactions avoiding on-chain transactions.
In this way it minimizes the need to use the exchange as custodian of their funds, and allows traders to respond quickly to market demands.
This solution was developed by ITŌ, a start-up focused on Bitcoin and founded in 2019 by Côme Jean-Jarry, Victor Afanassieff and Romain Rouphaël.
The alpha version was launched in mid-March 2020, and has since experienced substantial user growth.
Currently a limit of 0.01 BTC per exchange is set as a precautionary measure, but despite this, users have already performed more than 25,000 transactions, with a total volume of more than $10 million.
LN Markets, Bitfinex and Arcane Crypto
The co-founder of LN Markets, Côme Jean Jarry, said:
„We are very pleased with the group of investors as it has a deep knowledge of the industry and can add enormous value to our company. With their investment and support we will be able to accelerate our development and offer new trading experiences to our users. Bitcoin is both a financial resource and a very powerful financial infrastructure and we intend to develop both aspects of it“.
Bitfinex’s Chief Technology Officer, Paolo Ardoino, commented:
„This is one of our first public investments and underlines our support for Lightning Network. When we look at a project like LN Markets we see a direct application of the technologies we love. It is therefore important for us to provide funding and participate in such an innovative enterprise“.
According to Tobias Hoffmann, Bitcoin Revolution developer, financial markets professional and LN Markets user, this solution allows traders to react very quickly and move funds faster than ever before, opening up new arbitrage possibilities and demonstrating how exchanges should allow their users to trade with their funds.
Arcane Crypto’s CEO, Torbjørn Bull Jensen, also agrees:
„Having used LN Markets since its launch, and having had conversations with the team for a while, I am very convinced that this is something that can become really great. Bitcoin is ideal as a collateral asset and by leveraging lightning fast payments, LN Markets positions itself at the forefront of the new financial system evolving around bitcoin“.
Lightning Network and DeFi
Meanwhile, however, LN does not seem to find much favor among DeFi apps.
In fact, if there are 79,460 synthetic Bitcoins in DeFi, there are only 1100 on Lightning Network.