Custodial Lightning has clearly achieved product market fit, providing users with instant Bitcoin payments and minimal fees. Major platforms like Coinbase, Cash App, Kraken, and Binance are now offering over 200 million users direct access to Lightning payments. While custodial wallets excel at facilitating payments, the challenge lies in providing the same experience for self-custodial users, particularly during periods of high transaction fees.
The Lightning Network community is actively working on improving the user experience for non-custodial Lightning wallets. Two major areas of improvement are wallet interactivity and blockchain interactivity. Wallet interactivity involves ensuring that the receiving node is online to complete a Lightning payment, which can be challenging for self-custodial mobile users. The community is exploring solutions such as background notifications and the Async Payments initiative to address this issue.
On the other hand, blockchain interactivity refers to the cost and complexity of onboarding new users and managing liquidity operations for self-custodial users. Solutions like channel factories, ecash protocols, and sidechains are being developed to streamline these processes and provide a seamless user experience. Channel factories, in particular, are seen as the Holy Grail for self-custodial Lightning wallets, offering a capital-efficient way to onboard users without the need for on-chain transactions.
Other solutions like ecash protocols and sidechains are also making strides in improving the user experience for self-custodial Lightning wallets. These solutions aim to reduce the trust assumptions and operational complexities associated with managing liquidity and onboarding new users. The ultimate goal is to provide self-custodial users with a competitive Lightning experience that is on par with custodial wallets.
In conclusion, the future of Lightning usage lies in providing a simple, reliable, and cost-effective user experience for self-custodial users. With ongoing developments in ecash protocols, sidechains, and channel factories, the community is working towards enabling a competitive self-custodial Lightning experience. By investing in these last-mile solutions, Bitcoin and Lightning can continue to grow as the default value transfer networks for the world.
