OmniBOLT and the Lightning Network: The Happening and Future of Cryptocurrencies
Original title: "OmniBOLT and the Lightning Network: Unlocking the Future of Cryptocurrency Trading"
The Lightning Network is one of the most promising solutions to the scaling and transaction speed issues in the cryptocurrency world. It is a secondary solution built on top of the Bitcoin blockchain, designed to solve scalability and transaction speed issues on mainstream blockchains. The Lightning Network allows for near-instant transactions with low fees, making it a promising solution for micropayments and other use cases.
OmniBOLT is built on top of OmniLayer, which can create and transfer Tokens through the Lightning Network. This feature enhances the flexibility and accessibility of the Lightning Network to a wider range of users. Additionally, the inclusion of smart contracts in OmniBOLT is expected to provide additional flexibility to the Lightning Network and facilitate more complex contracts. This feature is especially beneficial for high-frequency trading, which was previously not feasible on the main blockchain due to excessive transaction times and high fees.
Is it a vision to use Lightning Network technology to transmit stable coins? With the integration of Omnilayer and OmniBOLT, can the BTC public chain ecology achieve significant growth?
NOTE: The information presented in the text below was obtained from publicly available sources on the Internet.
One, OMNIBOLT and Lightning Network chronological events
To clarify, OmniBOLT is not a reinvention of the Lightning Network, but rather a broad extension for a wider range of innovations Offer possibilities.
For a brief overview of Lightning Network and its development, interested readers can refer to [1]
In 2015, two papers officially invented the Lightning Network:
1. Christian Decker, Roger Wattenhofer , A Fast and Scalable Payment Network with Bitcoin Duplex Micropayment Channels [2]
2. Joseph Poon, Thaddeus Dryja, The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments [3]
In 2016, the BOLT protocol was jointly researched and officially released by multiple organizations.
In 2017, Bitcoin's soft fork based on SegWit in 2017 released more transactions for each block space, and addresses a Bitcoin vulnerability known as transaction malleability.
In 2018, Lightning Labs launched a beta version of its Lightning Network implementation on the Bitcoin mainnet.
In 2020, OmniBOLT was proposed in the omni community.
In 2022, Synonym uses a proof-of-concept tool released by OmniBOLT[4] to send Made the first USDT stablecoin transaction.
In 2022, Omnilayer will update the core to support "sendToMany", which solves the problem that Token is not conducive to the establishment of settlement layer channels, which can greatly Simplify OmniBOLT's protocol and let OmniBOLT build node communication like BOLT.
Another important milestone on the timeline was the release of Omnilayer in 2014, which facilitated the issuance of USDT on its platform. As of 2022, USDT has grown to become the third largest cryptocurrency asset.
This development highlights OmniLayer’s role in powering the Lightning Network’s settlement layer to accommodate diverse assets. With the advent of OmniBOLT, USDT transactions within the Bitcoin ecosystem can now be executed quickly and cheaply via channel payments. It can be said that this achievement provides a solid foundation for the development of the ecosystem.
Second, agreement and Github warehouse
OmniBOLT is currently under active development. Its Github repository has over 900 stars. As can be seen from the architecture diagram, the software focuses on building the Lightning Network on self-hosted wallets for mobile devices.
Interestingly, the nodes and channels of each asset form different logical networks, which do not occupy bandwidth and Computing resources, so that the transaction of one Token will not block the transaction of another Token. This is different from various layer 2 rollup solutions on Ethereum. In the rollup scheme, all assets, contracts, and transactions go through the same place, and the transaction of one contract will block the transactions of other contracts. The architecture does not have the ability to scale up.
Each token channels form a logical network
Speaking of the scale up capability, the main purpose of the Layer 2 network is to solve the problem of capacity expansion. Additional capacity is gained simply by adding nodes. Let's look at a set of test data from the OmniBOLT git repository.
On machines with lower I/O speeds, a single fluidity node reaches 30 per second ~50 transactions.
Distributed networks naturally have the ability to expand capacity: for example, adding 100 nodes to the network can process 3k~5k transactions per second, which has greatly exceeded Visa processing capacity.
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Benchmark of community test: One liquidity node can handle 50 Txs per second, ie, 50 mobile nodes can send Txs to each other via the liquidity node simultaneously.
3. How the implementation of OmniBOLT promotes the evolution of Bitcoin ecology
1. Problem
Currently, although the scale of Lightning Network is growing, its liquidity The total amount is less than 0.5% of Ethereum in DeFi contracts[5]. This remains the case without counting the value of various tokens and assets on Ethereum. It shows that the ecology of Bitcoin still has a lot of room for growth, and we need a tool to release this growth.
LN capacity and important chronological events.
「Source: Valkyrie」
The graph above shows that Strike has helped the development of the Lightning Network. Several major expansions of Lightning Network nodes have been driven by Strike. Could OmniBOLT's recently released OBWallet also drive growth again?
A wallet is not enough. The ability to securely issue and trade various assets is a key growth factor. Lightning Network, OmniBOLT, and wallets provide key technical support.
2. Payment
Bitcoin itself is volatile in price, so it is not a perfect payment medium. Strike offers its solution. In its software, users are allowed to convert fiat currency into bitcoin, then use the Lightning Network's Fast Lane to pay the bitcoin to the recipient, and then convert it back to fiat currency at the recipient. "Because the payment speed is fast enough, exchange rate changes will not have much impact."
But what if the payment network could directly support a stable payment medium pegged to fiat currency? It will completely solve the problem of medium instability, and also reduce a lot of exchange costs. That's the value that OmniBOLT brings.
3. Trading (HFT, High Frequency Trading)
Around 2015, Omnilayer released the DEX of the Bitcoin network. However, due to the high gas fee on the main network and the slow transaction speed, gas fees are required for submitting orders, canceling orders, and closing positions, so it is difficult for Omnilayer's DEX to be widely accepted. In particular, orders that are broadcast on the chain may not be able to be traded in the end. In other words, although DEX has the advantage of low slippage, it does not have the certainty of transaction. This problem was not solved until the AMM (Automated Market Making) model, Uniswap, was invented on Ethereum.
Monthly decentralized exchange volume divided by < /blockquote>centralized exchange volume (as a percentage) includeslargest exchanges with trustworthy reporting of exchangevolume metrics."Source: https://www.theblock.co/data/decentralized-finance/dex-non-custodial/dex-to-cex-spot-trade-volume”
DEX and Swap are developing rapidly on Ethereum. Over the past year, volume as a percentage of CEXs has fluctuated within this range: from a low of 8% to a high of around 16%. However, Bitcoin as the largest crypto asset is indeed excluded, and investors/speculators can only trade wrapped Bitcoin in Swaps/DEXs, which is not satisfactory.
The success of USDT on the Bitcoin network through the Omnilayer protocol proves that Bitcoin transactions and Feasibility of pricing (up to $20 billion in transaction volume per 24 hours). The only challenge that needs to be solved is the issue of transaction speed, which is what the OmniBOLT protocol is trying to solve.
Fourth, front, back and future
1. Front
Lightning The network can use Token. This fact is crucial because it means it can be used for more than just Bitcoin. Tether (USDT) is one of the most important tokens used with the OmniBOLT Lightning Network. Now with OmniBOLT, stablecoins are on the rise again on the Bitcoin network, enabling even more potential for micropayments and other uses. USDT is a stablecoin pegged to the U.S. dollar and is one of the most widely used tokens in the cryptocurrency space. Its ability to work on the Lightning Network may make it more useful and popular in the market.
OmniBOLT's smart contract capabilities promise to make the Lightning Network even more flexible. This is important as technology continues to evolve and new use cases are discovered. The smart contract feature based on zero-knowledge proof provides users with more security and privacy. This feature is especially important for making the public bitcoin network greener, amid growing concerns about how much energy it uses. The Lightning Network's ability to support micropayments and other use cases is expected to reduce the need for on-chain transactions, which will make the Bitcoin network more energy efficient.
2. Reverse
Fuzzy official Supervision. If the regulation does not allow Token circulation, people will hesitate and will not accept the use of OmniBOLT. Although regulation has gradually accepted the circulation of BTC, it is much more cautious about stablecoins. This is why crypto payments cannot really challenge Visa right now.
Didn't see a description about Watch Tower. (Maybe you can use lightning watch tower, because Omnilayer Tx is essentially Bitcoin Tx)
3. The Future
Lightning Network and OmniBOLT Bring Cryptocurrencies Comes flexibility and accessibility. The ability of the OmniBOLT Lightning Network to support a variety of Tokens and contracts offers greater potential for micropayments, high-frequency transactions, and other use cases that were not previously feasible on the main blockchain.
As the technology continues to evolve and new use cases are discovered, we can expect to see more innovative solutions built around the Lightning Network and OmniBOLT. The future of cryptocurrency trading does look promising.
References
[1] What is the Lightning Network in Bitcoin, and how does it work?,
[2] Christian Decker, Roger Wattenhofer, A Fast and Scalable Payment Network with Bitcoin Duplex Micropayment Channels,
https://link .springer.com/chapter/10.1007/978-3-319-21741-3_1
[3] Joseph Poon, Thaddeus Dryja, The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments, https://lightning.network/lightning-network-paper.pdf
[4] USDT Pilot Brings Tokens to Bitcoin Lightning,
https://bitcoinmagazine.com/ business/usdt-pilot-brings-tokens-to-bitcoin-lightning
[5] Bitcoin Lightning Network Growth is organic coming from real world adoption,
[6] OmniBOLT #6: Automatic Market Maker model,
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