Derivatives Trading Now Faster & Safer
Putting an end to months of toil and anticipation, LN Markets has finally started the ball rolling on Bitcoin Mainnet. This is not the first time LN Markets has seized the attention of blockchain enthusiasts. The platform had created a lot of buzz in the market during its launch as the first-ever derivatives trading platform built on the Lightning Network.
While LN Markets crosses this major milestone, what does it mean for the users?
LN Markets will now run on Bitcoin Mainnet, the original and main network for BTC, where Sats have real economic value, unlike on Testnet or Regtest. Users can now consume the money in their Lightning wallet to its last unit.
Before we dive into the features of the application and how it is going to revolutionize derivatives trading, let’s take a look at what Lightning Network is.
Lightning Network (LN): An Extra Layer for Extra Speed
Be it Bitcoin or other novel cryptocurrencies, scalability continues to be a major stumbling block for investors and developers. Transaction fees mount new heights as the system becomes more popular and congested. While Bitcoin facilitates 7 transactions per second at the most, Visa completes anywhere from 24,000 to 50,000 transactions per second. That looks awfully bad. How is Bitcoin an efficient alternative to traditional currencies if it is unable to reduce the time taken for transactions and the fees that entail?
This is exactly what the Lightning Network aims to resolve. The Lightning Network adds a separate layer to Bitcoin’s blockchain, facilitating fast, secure, private, trustless, and permissionless payments. It allows users to create payment channels between any two parties on that extra layer. Since the channel is set up between just two people, the transactions will be completed in a fraction of seconds and the transaction fees negligible. These channels will exist so long as the parties desire.
How does LN Markets Simplify Derivatives Trading?
Cryptocurrency derivatives have been gaining popularity over the past few years as it benefits traders who want to stay safe from the drastic price fluctuations in the market. Retail traders enter a Bitcoin derivatives position through exchanges that act as trading venues and clearinghouses.
Exchanges demand a deposit, an account funded with Bitcoin as collateral from traders to ensure that buyers and sellers stick to their contractual obligations. This way, traders transfer the ownership of their assets to a third party and take counterparty risk. They are free to move their bitcoins in and out of the exchange as they like to reduce the element of risk.
Of course, this system comes with its own set of cons.
1. Shifting across different wallets and interfaces is no fun task. It is time-consuming and redundant. It takes about 1-hour for bitcoin transactions to confirm payment.
2. Bitcoin transaction costs along with exchange fees will end up being a hefty sum to pay.
3. The Bitcoin market is highly fluctuating. If you don’t keep tabs on the movement of the graph, you will miss your opportunities.
LN Markets, leveraging the full power of the Lightning Network (LN) is a trustless environment that reduces counterparty risk to its minimum. Traders can access Bitcoin markets almost instantly and make the best use of its opportunities.
LN Markets: A Quick Review
Great interface and user experience make an application popular, LN Markets is no exception. The best part is, no email or registration is required. If you have a Lightning Wallet – any Lightning Wallet – scan the QR Code and sign in just instantly.
Here is how the platform operates:
Traders are ready to enter the derivatives position after they have funded a lightning channel with LN Markets. When traders submit orders, they agree to transfer a margin to LN Markets and receive lightning invoices in return. From now on, LN Markets will act as brokers and enter the market on behalf of the users. Similarly, soon after the closing is confirmed, funds are transferred to the trader’s wallet with a lightning payment.
In a nutshell, LN Markets will be a breath of fresh air in derivatives trading by facilitating non-custodial, auditable, and fast trading accounts.
The Road Ahead
Going live on Bitcoin Mainnet will foster the further expansion and growth of LN Markets. Having earned credibility by strictly keeping up with the objectives, the platform can now attract investors and take the project to the next level with ease. In the near future, the platform aims to project itself as a settlement rail for leading financial institutions. To learn more about LN Markets, visit lnmarkets.com. Make the best use of your Bitcoins, to the last Sats.