Amboss Launches Hydro: A Liquidity Solution for Bitcoin Layer 2
Amboss, a Lightning Network data analytics provider, has introduced Hydro, a subscription-based liquidity solution for the Bitcoin Layer 2. The aim of Hydro is to enable businesses to receive payments over Lightning without the complexities of channel management or the need for centralized custodial intermediaries. This solution allows users to automatically access liquidity from decentralized sources to their Lightning node on demand, with fees ranging from 3.5% for the initial setup to as low as 0.003% for payments.
Amboss co-founder and CEO Jesse Shrader believes that Hydro will simplify real-time payment infrastructure and facilitate global circular economies, similar to what has been observed in Costa Rica’s “Bitcoin Jungle.”
Pay with ‘ambucks,’ powered by Magma
Hydro operates using Magma, Amboss’s marketplace for buying and selling Lightning channels. It sources liquidity from the open market, allowing sellers to earn a bitcoin yield by providing liquidity on Magma without the risk associated with centralized yield-generating platforms. Hydro purchases Lightning channel leases from sellers that meet its quality criteria at the lowest price. Users can customize their Lightning node payment capacity and automatically buy channels using Amboss’s prepaid credits called “ambucks.”
Additionally, businesses can set target inbound liquidity, which determines the total value of bitcoin payments they can receive. This feature enables tailored and cost-effective channel management without locking up significant amounts of capital or requiring extensive technical expertise.
Addressing Lightning Network Adoption
The Lightning Network is a second-layer solution built on top of the Bitcoin blockchain that facilitates fast and low-cost transactions. However, businesses have faced challenges in sourcing liquidity and managing Lightning channels, which has hindered enterprise adoption and led to the use of centralized custodial solutions.
Despite these challenges, Lightning Network adoption has been steadily growing. Currently, the total capacity of the Lightning Network is nearly 5,000 bitcoin ($129 million), although this is a 12.5% decrease from its peak in July.
In an interview with The Block, Jesse Shrader expressed his belief that BlackRock’s proposed spot bitcoin ETF missed an opportunity to deploy funds on the Lightning Network and earn non-custodial yield by providing payment infrastructure that disrupts traditional payment processors like Visa, Mastercard, and American Express.
Hot Take: Hydro Simplifies Liquidity Management for Lightning Network
Amboss’s Hydro offers a game-changing solution for businesses looking to leverage the Lightning Network for fast and low-cost transactions. By automating liquidity access from decentralized sources and eliminating the complexities of channel management, Hydro simplifies real-time payment infrastructure. This subscription-based service allows businesses to receive payments over Lightning without relying on trusted custodians or intermediaries. With customizable payment capacity and tailored channel management options, Hydro provides a cost-effective solution for businesses seeking to adopt the Lightning Network. As global participation in the Lightning Network grows, Hydro aims to bootstrap global circular economies and drive further adoption of Bitcoin Layer 2 technology.
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