E162: The Lightning Network in 2025 with Graham Krizek - Founder of Voltage Cloud

Jacob Brown (00:02)
Alright, I'm here with Graham. How are you man?

Graham Krizek (00:05)
Good, how are you doing?

Jacob Brown (00:07)
I am, I'm very good, very good. Happy to have you on. Very timely too, because I've been very bullish on Lightning, one of the few on the timeline that continues to be. And you you try to find data points to like back up your claims and Lightning is historically hard as F to find that data, especially outside of like channels live and then like total capacity. So,

Graham Krizek (00:34)
Mm-hmm.

Jacob Brown (00:36)
I was reaching out some people to be like, hey, who can I talk to to find some of these, some of this data? And then got connected to you and you were like, we have a report coming out soon. Just wait. That came out over the weekend, or about a week ago. So a lot to touch on. but just to kind of start with that kind of a left curve question, why, why do think people are fading lightning so heavily in, you know,

Bitcoin season two, we're like this kind of arrow in a Bitcoin.

Graham Krizek (01:07)
Yeah, definitely. mean, I think that there it's a couple reasons. I think one is what you just kind of mentioned before of the data structures and what's publicly available is much different on lightning than exists in any other blockchain, whether it's Bitcoin, Ethereum, so on, whatever you want to whatever you want to name. It's far, far different. So it's harder to kind of quantify, have a direct line of sight into how much is actually used, who's all using it, like all of these different things. And so when when there's

not as much data out there. It's very easy to just kind of throw shade of like, it doesn't work or anything like that. And you couple that with like kind of the difficulties of it early, like early on in the network's, know, lifecycle, which it was kind of hard to use in the early days. I think we've come a huge, like a very long way in terms of the usability. And so not a lot of data with like, it used to suck. like, obviously it's, it's, there's no reason for me to think that it's doing better today because there's not data back. It's like, I get that.

Jacob Brown (02:03)
you

Graham Krizek (02:05)
And I think that's one of the aspects of it. And then I think the second part is everyone has like a motive that is counter to the success of lightning, whether that's their own blockchain entirely, whether it's a different scaling solution on top of Bitcoin and different L2, whatever it is. Usually these people that are like trying to kind of discredit lightning quite a bit, they have some other thing that they're trying to push like a sidechain, a state chain, some bit VM thing, whatever it is, they have something else that they're trying to push. So

It's natural they want lighting to seem like it's a failure because they have some newer better thing that they're trying to pitch.

Jacob Brown (02:41)
Yep, mean that makes total sense. Real quick, because I come from an investing background and like as you mentioned, the Bitcoin layer two shell of like 12 to 18 months ago was insane. It seems like it was the opposite for lightning in that.

Graham Krizek (02:49)
Mm-hmm.

Jacob Brown (03:02)
early on, kind of 2018 to 2020 era was like mostly lightning getting funded, especially by some of the bigger funds. Does that track for you?

Graham Krizek (03:12)
Yeah, I mean, I think so. think that it's been I mean, lightning has had a very unique journey. I think it's just like Bitcoin in general, like especially lightning. Like there's no one that owns lightning. Like again, you think about like the other things out there. Solana, Ethereum, they're all like they try and call themselves like this decentralized network, but there's some like foundation or company or something behind it that is like paying tons of money for the marketing and all of those things. And so lighting is very different. It doesn't have a kind of unique.

body or entity to like to to support it. So there's obviously a lot of like companies that contribute and support and things like that. And and the VC landscape for it has been, you know, it's been very kind of like kind of come and go across the years. But I mean, overall, we've like we've seen some really strong investors showing really a lot of interest in lightning. And I think that's continuing. I think that they like this year and next year will be even more significant. So, yeah, I mean, I definitely track against that. And it's been it's been quite a unique journey. But I think it's because of the

the grassroots nature of lightning in general.

Jacob Brown (04:11)
Yep, that makes sense. It also seems like a lot of the early investments were at the infrastructure level. Like we need to make it easier to work with first before you can start doing investing in kind of like the consumer app and like front-facing level. So hopefully, and this is a question to you, but like hopefully this next kind of era is like leveraging the voltages and the light sparks and stuff like that so we can actually get them to users much more easily and raise on that narrative.

Graham Krizek (04:18)
Mm-hmm.

Yeah, yeah, definitely. think that I think that generally, I mean, it's been true, whether it's Bitcoin, Lightning or much of anything else, investors generally like the infrastructure plays just because it's kind of the picks and shovels. Like if anyone's doing anything else on top, they need the kind of the base level set of tools to be able to build what they want to build. And then also, it's just been it's something that has been.

successful in other areas of the internet. And so they're kind of, I think it's a little bit of maybe a de-risking in their minds of it's something that they maybe understand a little bit better. Cause if you're pitching a VC, some brand new like kind of L2 that's going to do a bunch of yield things. And it's kind of like all this crazy stuff. It's pretty risky from an investor standpoint, because it's all unknown. It's all brand new. Where some of the infrastructure stuff is, is a little bit more streamlined. It's more understood.

Jacob Brown (05:30)
Yep, makes sense. This is kind of a multifaceted question, but I want to tease apart, because I think people, again, they're fading lightning to their peril, in my opinion. And part of it is, as you mentioned, the data is hard to find. It's peer-to-peer versus global state. But the current narrative is that things like hyperliquid, which is like a dex that people can trade on, or Solana, will actually scale. There's this newer narrative that like...

Graham Krizek (05:39)
Mm-hmm.

Mm-hmm.

Jacob Brown (06:00)
maybe sufficiently decentralized, it's much more lower number than we previously thought. So, but lightning goes the exact opposite way. And it's like not global state, it's sharding everything, you know, it's nodes and peer to peers. So for someone who's like in that space entirely, how do you read the pulse of like the landscape of peer to peer versus global state and these kind of like chains?

Graham Krizek (06:14)
Mm-hmm.

Yeah, definitely. mean, like you.

So like you obviously need some kind of global state, which is like the Bitcoin layer one, like to have like this kind of decentralized money that everyone can fully validate and know everything about all that stuff. You need that kind of global state, but you don't need that global state to do everything. You don't need that kind of that that consensus layer to do everything to know everything and be able to kind of see every single transaction. That's kind of how people like Solana or whatnot is trying to build it of like, let's just figure out how many what is the maximum amount of transactions we can do on a single

blockchain and how fast we can get blocks to confirm and all of these things. But you don't need to do that. You can do it in a system like Lightning that is peer to peer and it leverages the trust and security of that base layer to provide you with the assurity that your money is real. It's really there. You can't be stolen from you, like all those different things. And so you can leverage that same trust of that layer one, that the blockchain

and do a lot of things on top that don't need to require the blockchain. You can have the same amount of trust and security via modern cryptography and networks and all these different things that maybe we don't need to go into all the details of. But generally speaking, you can build them in a much more performant way without having to have the global state broadcast to everyone in the world.

for every single transaction just these ones that maybe you know go in and out of lightning channels or things like that so it's a much different way of building it but obviously I think that it's a more correct one.

Jacob Brown (07:54)
Yep, that makes sense. Okay, and then kind of moving into this report, maybe first, what was the intention of trying to put this out with Fidelity?

Graham Krizek (08:07)
Yeah, I mean, I think us and Fidelity both kind of a, think we saw the opportunity of providing some more data and analytics inside of lightning and what's happening because like we've talked about, it's really hard to get that kind of insights into what's actually happening and what's, what is the usage, who's using all these different things. And so we wanted to kind of try and uncover some of that data, bring more things to light. And so being able to,

shed some light on just kind of how it's going and what are the advantages of it? Because I mean, as far as we've seen in implementing lightning over the years is it is by far the best way of moving value inside of the crypto ecosystem. Or I will say in the world, even looking at TradFi and things like that, it is the best way of moving value in the world. And so we want to showcase that and we showcased it with data as well. Like in the report, we're showing half of a second final settlement of payments for

potentially zero fees or you know less than half of a percent fee if you have to go through a hop or something like that. so we're showcasing that it is delivering on this promise of what it was made to do and by that kind of going to the title it's expanding what's possible on top of Bitcoin is Bitcoin isn't just a store of value only it's not just this rock that you buy and you put in a safe. It has a lot more use cases and a lot more things that you can do with it. So those are kind of the reasons why we did the report in the first place.

Jacob Brown (09:28)
Super, super useful. then, what are some of the big data points that people should know about? Because as I mentioned, the two everyone kind of calls out is locked capacity, which is not as useful as you think because of channel efficiency, which we can get into. And node count and channel count, which again, are like, directly don't tell you that much. So underneath the things that everyone kind of sees and compares against, like look, my, you know.

Graham Krizek (09:39)
Mm-hmm.

Yeah, yeah.

Jacob Brown (09:56)
Sidechain has more TVL because blah blah blah. We're better What are the data points that people should be paying attention to that are in this report?

Graham Krizek (10:01)
Mm-hmm.

Yeah, I mean, it's so yeah, it's a good call out of like the public, the public metrics are like node count, channel count, channel capacity. And all of those are like pretty bad metrics about like kind of looking at anything like in reality. Because we could have two, two nodes on the network that are just doing lighting payments in between each other. And maybe they're reaping tons of value by the speed and the cost savings.

And that's success, like that's success right there. So those kind of metrics don't necessarily matter. The things that are more interesting and more indicative of actual success are things like what is the total transaction volume in terms of like number of Bitcoin moved across the network, the number of transactions, like kind of fees, fees saved versus doing these payments on chain versus enlightening. Those kinds of things are what really matter. And so those are the things that we tried to go more into inside of their report.

and try and showcase like, you know, it's made for the speed and the cost savings and showcasing like, is it able to do that? Like, is it kind of did we deliver on that promise? And those are the things that we were able to uncover is that, yes, you know, like I mentioned, like we have we have payments that complete in under half of a second. And if you have a direct channel partner, you can do that with zero fees at all. And so you have to pay like a channel open fee. But on the payment itself, there's no fees that need to be enforced on it. So.

is proving to be very, very good inside of the ability of moving money, moving value from one person to another. And then like the some of them, we didn't go as much into like, you know, total transaction volume or counter anything, because those are kind of given their private, they're kind of like more proprietary metrics to like the companies or whoever's like running the services. Ultimately, like we've seen a 400 percent, you know, jump from volumes from last year to this year.

And then, know, going looking two years back to now, it's over like 1200 % increase. So we're seeing significant jumps in usage year over year. And we expect that to continue. We think 2025 will be a really large year as well. So we're seeing huge amounts of growth inside of all those metrics. And that's where we're trying to at least even if we can't share every single exact metric, we're at least showing like, look, this is what we're seeing to try and combat like people that are saying like, there's only $500 million in lightning are

chain has five billion, like, you know, we're so much better. But like ultimately also like the thing to think about is the Lightning Network, the less is more like we the less that we can store in the network and still deliver successful payments, the better. So it's not like we want to have 20 billion dollars in Lightning. It'd be great if we could do, you know, billions of dollars of volume with only 500 million in liquidity and just kind of, you know, recycling it. That's far better. And so it's kind of.

I could talk all day around the differences in metrics and things like that, but it's really important to draw those distinctions out.

Jacob Brown (12:48)
No, this is great. I want to double click on a few. We won't double click on the volume one, although that is like, that's one of the great ones that I think River might have given some details in their recent report, but that's a, I understand why people want to hold that close to the chest. One that I'm curious on is...

Transaction size like the average transaction size. There's a big narrative going on right now of is lightning best for micro payments And I'm very bullish on micro payments If we can solve for the kind of like mental cost and UX issue of it But and then we're also seeing exchanges come online and so they're gonna be moving big volume So what are we seeing in as far as like is it still just like ten cents going a ton of times or is that? Increasing what's the data on that?

Graham Krizek (13:36)
Yeah, definitely. mean, it's...

The payment sizes are definitely increasing just on an average standpoint. We have customers like some exchange customers that I mean their average payment size is like 500 bucks and it's just kind of people going in and out with like $500 which is you know again going back to like 2019 lightning people were like like no more than $5 could ever be like transacted and we're obviously increasing that over time into more and more know sizable volumes. We have customers that have like you know a 10 Bitcoin channel that they can do

huge amounts of transactions back and forth with their counterparty on. And so it's really the amount that you can transact with is increasing over time. When you have a direct channel counterparty, there's really no, the only limit is the channel capacity, which you could do a huge amount of. And then routing through the network generally, we're seeing increase too, if you have to hop through other providers in the network.

So we're seeing all those increase over time. The other part of it though is micro payments, which is something that we do call out a little bit in the report. that micro payments are definitely very possible on Lightning and we've seen that in a couple different use cases. The thing to be aware of though is you can really get into fee trouble if you're doing a lot of little payments. If you have to do a hop inside of your payments, there's a lot of channels out there that have like a one set base fee. So if some of these micro payment use cases, people are transacting with one set, two sets,

like fractions of a cent, like really small payments, which is great. But if you have to go through three hops, you're going to pay like five sats for a two-sat payment. And that just doesn't make a lot of sense. you need to, it's totally possible. You just need to be very cognizant of how your channels are set up and how your overall architecture is set up to make sure that you're not...

paying way too much in fees in those use cases. And that's something that we help our customers with, but ultimately it's very possible to have like a really solid micropayments use case. You just need to kind of take into consideration a few different aspects.

Jacob Brown (15:31)
Makes sense. You mentioned hops a few times and this is one that was eye-opening to me. There's a lot attached to it. It affects fee rate, affects time to finality, like how fast it will confirm. So yeah, and maybe payment success rate, I can imagine. If you have to go to the edge of network, you're gonna have a fall off. So give us some color on this hops idea.

Graham Krizek (15:48)
Mm-hmm. Yeah.

Yeah, yeah, yeah. So in Lightning, a hop is basically like being able to route a payment through another node. So I could have a channel with my friend, and that's the only channel that I have, friend Bob. And Bob has a channel to McDonald's, and I don't have a direct channel to McDonald's, but I can still pay McDonald's by routing through my friend's node, my friend Bob's node. And so that's basically what a hop is, is just using someone else's.

node to route a transaction. And what that does is it allows you to not have to have a direct channel with everyone that you're transacting with, don't have to It makes it much more efficient. But in every single one of those hops, people are able to charge a fee for routing your payment. And then it's also increased amount of just kind of complexity inside of the payment. that's another server to go connect to, so you could be going from the US to Africa to Europe for your payment. Things like that of just added latency and potential failure. that's what we

highlight in the report of like the difference in every time you're adding a hop to your payment, you're likely going to pay more in fees and you're likely going to have a higher chance of failure. So that's something that we work with our customers on is really being able to really set up your liquidity. So you're decreasing those amount of hops as much as you can because you're just going to have cheaper, faster payments, more successful payments. if you, can still like hops aren't all bad. You can still leverage hops if you're just kind of cognizant of, of where you need to go and the right people to connect to and

things like that. So hops are an important consideration as people thinking about lighting strategies. But it's also one that when you work with a provider like Voltage, we try and handle for you. So we don't want to like throw it all at you. But it is an important thing to think about as you're thinking through like the topology of the network.

Jacob Brown (17:39)
make sense. This is a sad question but on the topic of this will be like inside lightning but is this where someone like voltage really helps in the sense of if you're trying to go from A to B and there's four places in between I imagine there's many ways to get to that destination there's not like math involved or like algorithms involved to kind of like optimize for that so like how much

for the average user is like just spinning up an L and D node gonna get you most of the way there versus using someone like voltage to abstract some of those things.

Graham Krizek (18:15)
Yeah, definitely. mean, that is something that we help our customers with quite a bit is really being able to abstract away a lot of those things in our platform. We don't expose hardly any of that to you in the first version of when voltage first launched. We did expose a lot of the guts of lightning and the channels and all of the things that you need to kind of worry about. You know, the way that we built out the platform today and some of the new things we're working on, we're definitely simplifying a lot of that experience. So it's not something that you need to really integrate or think about as you integrate with someone like us.

We handle a lot of that for our customers because ultimately as we work with customers, there's a lot of people that don't necessarily care about all the guts of hops and the fees and all of these different things. They really just want cheap, fast payments on top of Lightning. And so that's what we're delivering is just basically that experience. So if anyone does want to go deep into that, we definitely allow it with the way that our platform is architected. You can definitely do that. But I would say there's not a lot of customers that are really looking for that level of in-depth hands-on experience.

Jacob Brown (19:15)
Okay, a couple more things I saw in the report. There was a mention, I mean there's a big topic nowadays around yield on Bitcoin. Babylon is doing it, everyone wants to get more Bitcoin on their Bitcoin. Which also brings in the meme of like, where's it coming from bro? And you got the duck chasing. But is lightning a good yield bearing network for people? Because it's it's touted as such by some groups like lock up liquidity route efficiently and get a little cut.

Graham Krizek (19:24)
Mm-hmm.

Mm-hmm

Jacob Brown (19:45)
Yeah, anything on that would be great.

Graham Krizek (19:47)
Yeah, I mean it's yeah the kind of

the aspects of earning yield on Lightning is definitely something that's been kind of talked about in research the last couple years. I think it's certainly, it's possible, like there are opportunities out there to do things like that. I don't think that it's as, some people I think make it little bit too easy or make it seem a little too easy because it is something that you do need to spend a decent amount of time on and invest some money in and really do the work to make it a solid return. So it is certainly a possibility. It is entirely possible to earn yield

routing payments on top of a lightning is it when you compare to other like yield bearing instruments or possibility inside of crypto a lot of the comparison is like staking whether it's taking eat or some of the new Bitcoin stuff or whatever where that's a little bit simpler you usually delegate out like you're sticking to a staking provider and you send them your eat or whatever and they just kind of

They just give you a cut. Those are a little bit more passive, where earning yield on Lightning is maybe a little bit more active. You got to do a little bit more of the work. Certainly possible. I always try and make the distinction, call out, that it's not just set it and forget it, and it's not always super easy. You got to do a little bit of work to make it fruitful.

Jacob Brown (21:01)
Okay, that's good to know. And then last one I want to touch on is exchanges. We've finally seen, I think Coinbase has Lightning support now. So what's the pulse on, do we have coverage in all the big ones now? So Lightning is kind of like reach coverage, any holdouts? What's the status on like exchanges and Lightning?

Graham Krizek (21:09)
Mm-hmm.

Yeah, I mean, we've in 2024, we've definitely seen a good jump in the number of exchanges or people like exchanges adopting Bitcoin. We think that 2025 will be an even bigger year for that because we've had some big players like Coinbase and whatnot and adding in Lightning and we're there's still a lot more to go though. You you look at like the top 100 exchanges in the world. There's still a lot of them that don't have it yet. And so that's what we've been working on is just trying to set work with those kind of exchanges to add in Lightning and add in the support.

so they can get the cheap fast payments as well as their customers. we're early, think, and even though we had some really big people adopting it, we're still early. There's still a lot more to go. And we're working with several different companies now that we should be able to announce soon to be able to integrate Lightning. So we've come a long way. I think 2025 will be an even bigger year where we have even more exchanges. then that's one of the challenges of adding in Lightning is it's like, well, know,

do I do with it if I don't have a wallet or another exchange to support it? And that's kind of always been the chicken and the egg problem. think that we're finally starting to crack that and we're getting more and more. The amount of people that support it today versus the beginning of 2024 is far different. And so we're starting to crack that egg, you know, so to speak, and really get more people involved.

Jacob Brown (22:39)
Love it. Okay. So we have pretty good support and exchanges. You know, we have Cash App and some big apps that support it, Strike. So the next natural question is like, what are you doing with it? And you know, we talked about microtransactions, which could be like something like a Nostra Primal. It could be Stacker News where you're zapping. Obviously, payments is a clear use case. That's kind of the original one. And then...

Graham Krizek (22:46)
Mm-hmm.

Jacob Brown (23:04)
maybe we're early, but inter-exchange settlement could be better with Lightning. But anything you're seeing on what are the dominant use cases of the network and do you see it shifting at all in 2025?

Graham Krizek (23:09)
Mhm.

Yeah, I mean I think that we've definitely seen from what we see we see a lot of like more like peer-to-peer payments So people sending those like from an exchange into like their own wallet or even like, know Wallet providers like a lot of Satoshi sending from person to person We see a lot of like mix between like the individuals and going in and out of like businesses so exchanges things like that We've seen we've seen quite a bit of that and I think that we're working with more and more kind of payment processors to do more unique things like

gambling

or online payments or things like that and being able to leverage lightning to speed up those transactions. Ultimately, anyone that's moving Bitcoin on chain can leverage lightning and do it faster and cheaper of just the same kind of experience. And so that's what we've been kind of selling essentially is just being able to have some significant cost efficiencies inside of instead of your existing operations via lightning. And so we see that applying kind of across the board. So again, a lot of like the peer to peer kind of a cross border

is

areas of like, you know, net new use cases like energy settlement and things like that.

Jacob Brown (24:53)
Very

cool, very cool. You mentioned moving around Bitcoin and the speed of light, and that's like the big use case. We saw a big announcement though with Tether, stable coins coming to Lightning. And Tapered Assets was announced over two years ago at the main conference. Now we're seeing it, hopefully, like go live on mainnet, it's almost time. Yeah, what's your stance on how big is stable coins and Tether coming to Lightning?

Graham Krizek (25:02)
Mm-hmm.

Yeah, I mean, we're very excited for it. think that it'll be a really big deal just because of like, guess a couple reasons. One, as we've seen, like stable coins are one of the most popular use cases for crypto in general. And so there's very obvious demand for it. People around the world are using it, using it in large volumes. So it's kind of like you, if you think that stable coins aren't used globally, you're kind of like lying to yourself. Like they're very obviously used in a lot of places. And so that mixing

it with the very cheap, very fast payments is a recipe for huge success. Especially as like a lot of these places where stable coins are very popular are like developing countries or places that don't have a great kind of existing banking systems. And so the fee of paying $5 to move something on Ethereum or something is pretty significant to them where people in like the US are like, okay, it's kind of like cost of doing business, but that's a significant amount of money for some places, some countries, some geographies.

And so being able to provide the same payment experience faster and then for a

fraction of the fees is incredibly valuable for those people and so that's gonna be a really important thing that we are Kind of pushing for and we think that will increase a lot of adoption of stable coins on lightning so that that's just huge in general and I think that there's also gonna be some like kickback effects of More like just more liquidity for more money movement larger payments all those different things inside of Inside of lightning by adding in stable coins, so I think it's gonna be a win for a lot of different areas

of the network for these consumers of stable coins are going to have a better way of moving money and doing it on a protocol that they know and trust like everyone.

pretty much everyone trusts Bitcoin. you like, you kind of know about it, mean, sure, there's, there's the boomers out there that like, you know, don't trust it or whatever. But like, if you know, kind of, if you look into it, you understand Bitcoin, you get it. It's got a very strong reputation compared to Solana or something where they're like, you know, I don't love that I'm using Solana. I'm going to do it because that's where this stable coin is running on or whatever, but they don't,

they don't really like it. think that Bitcoin gives a much better reputation and people feel much better about it than some of these other ones. And so I think that that's going to go a long way too. So I think there's a lot of things that are going to mix together here that are going to be pretty big for the network as well as these users of stable coins.

Jacob Brown (27:44)
Yeah, I forgot where I heard it. I think it was the Bitcoin review podcast and they were talking about how The only two things that product market fit in crypto is bitcoins of store value and stables as a way to like transmit value Like everything else is still kind of like almost there trying to find it So if you can do it not on Tron and you could do it on lightning network With that kind of like the name brand of Bitcoin that seems like a no-brainer One thing that's kind of inside baseball want to touch on is

Graham Krizek (27:55)
Mm-hmm

Mm-hmm.

Jacob Brown (28:14)
With Taproot Assets, that's a Lightning Labs thing, which by extension means it's L and D. And in the sidechain space, everyone's building different EVMs or virtual machines. EVM is the dominant one because you get the Lindy effect of each developer. But there is some, some people are doing Solanas VM, some building their own. So you get complexity trying to attract developers and interoperability. Can you work with your TXOs? Is there an issue here where...

Graham Krizek (28:20)
Mm-hmm.

Mm-hmm.

Jacob Brown (28:43)
Because L &D is dominant. Is it going to be issues with Core Lightning or the other ones? LDK? Yeah, what's I'm just trying to see like if because some of my podcast is founders So like if they're trying to build on this in a year from now What's the pulse on this and what what are like potential headaches you see?

Graham Krizek (28:54)
Mm-hmm.

Yeah, I it's technically possible for like a core lightning or an LDK or anything to integrate with Tapered assets and add support and all those things. I don't really look into it, looked into it in depth, but I think it would be probably a decent chunk of work for them to go and do that. And I don't know if they're planning on prioritizing or anything like that. So I don't really know the state of that. It's possible, but it's probably a lot of work. And so I think that, yes, I think that from the stable coin use case, a lot of it's going to be on L and D. And I think that that's

I don't, you know, a lot of, we've talked over the years about like, you know, how L &D's dominance in the market and all of those different things, but I think it's ultimately just, it's a very.

Popular is the very used technology. I think we'll continue once we add in this taproot asset compatibility And so I mean, you know, we don't necessarily have issues with that We've been running L &D for a long time and I think that the the door is open for anyone else to kind of integrate but if you're a builder looking on doing anything with taproot assets I would definitely just go to L &D because you're kind of Hoping that something else comes along and has support or anything like that though I would definitely just go straight straight to that and and you know lighting labs has done a very very good job of

supporting the ecosystem and helping people out and things like that. I would definitely recommend just go to the source on that. I think in a year or two's time, maybe we're looking at a different landscape, but that's the way that we see it today.

Jacob Brown (30:28)
Got it, that makes sense. And then any pulse on, because I kind of Taproot Assets, Spark, which is the new kind of like light spark off-chain solution, and Ark kind of in the same bucket because they can extend lightning. For someone who's a builder, is that framing wrong? Like how do you view the kind of like three that are merging to extend lightning?

Graham Krizek (30:53)
Yeah, I mean,

I see them, they're all very different than Lightning. They're all interoperable with Lightning or something like that where you can have like pay a Lightning invoice into an ARK thing. I think all of them have unique opportunities and unique challenges. I think that there's things like the liquidity requirements inside of ARK are going to be very substantial, which is something that if you're just kind of a user just doing some payments, maybe it's not like that big of a deal. But from where we sit in the ecosystem and being able to actually integrate and run things

scale. That's a very big concern for me. Same thing with like, you know, the spark or anything like that. mean, I don't think that state chains have historically done very well. And I don't think that I think that they're gonna have a lot of the same issues of existing state chain proposals and things like that. And so I don't I

I haven't found any of those other, the other proposals are interesting. I haven't found one that is incredibly convincing of like, this is going to take over. This will be better. That's why us as a company are still very focused on lightning because we haven't seen any kind of proposal that is going to beat it at the end of the day. I think even with some of the unique requirements in lightning with, you know, the liquidity or requirements, the, the liveness of being always on and all of those things, we still think that it's going to be the best way of transacting. And so,

The other proposals are interesting. are not convinced that any of them are going to be what we're looking for and what our clients are looking for. And so that's why we kind of focus where we do.

Jacob Brown (32:25)
And then speaking on this because like, you know, we're bullish on lightning in this room but we there's still things to solve so going into potential opcode upgrades and like biggest problems today let's start with the biggest problems today so like what are still the thorniest issues for someone building on lightning or even leveraging like you as an infrastructure provider?

Graham Krizek (32:53)
Yeah, mean, for lightning specifically, think the biggest thing that we bump into is the challenge with self-custodial lightning. That is definitely a challenge because of some of these unique requirements that I mentioned of like you need to have a channel to transact which requires an on-chain.

transaction to create a channel. If you're trying to add 10,000 users in a day, that's a very real constraint and that's a very real cost, as well as the need for being online and signing transactions, whether you're sending or receiving. Those are both much different than the on-chain considerations when you're integrating with Bitcoin on-chain versus Bitcoin on Lightning. I think that those are very unique challenges that I still think are very prickly in terms of the challenge.

There's people that trying to solve for some of those. Again, I haven't found

We haven't seen a great proposal in solving that. We have a proposal ourselves that we've been keeping internally that we're going to be working on here in the next month or so to try and solve for the non-custodial use case on Lightning. We're going to do it in a pretty different way that I think others haven't really. We haven't seen anyone else doing, so we're hopeful that we're able to try and maybe solve for that in a little bit of a better way. We're definitely interested in solving that problem, but today it is definitely a very real challenge that we've seen a lot of people bump into.

We think it's solvable. It's just it's definitely one of those that is that is out there today and very, very in your face if you're trying to use a nonconsolidable experience.

Jacob Brown (34:25)
And just to make sure the listeners understand and I'm clear, the...

The way that lightning has kind of worked today is like a hub and spoke model is how it's been described. So like there's like big hubs that are connected and then you can connect to those. So the issue you're saying is that you open a channel with one of these big hubs, it could be voltage, it could be river, could be Binance, and you're making a decision to put your liquidity there. So that choice is already somewhat important. And then you just hope that the big five or 10 are well connected enough that through that one, you can get to everywhere.

the issue succinctly or something else.

Graham Krizek (35:02)
Yeah,

there's definitely one of them. the other thing is like to so right now we're very fortunate that we're in the one set per V by kind of mempool. So transactions are pretty cheap on Bitcoin, but there is a time and I think there's going to be a time in the future where transactions are 30, 40, 100 sets per V by and in that fee environment, it gets very expensive to open a new channel. And so if you're trying to just, I want to put 20 bucks into my lightning wallet to to just have some spending money.

The transaction fee on that could be 20, $30 to do that. So it kind of makes it really hard from the cost standpoint of opening it, onboarding a new user. And so that's one of them. And then the other thing is when you're receiving payments in Lightning, your node or your keys have to be online to receive the payment, which is the exact opposite of on-chain Bitcoin because you can just have an address. Your keys can be in cold storage in your basement or whatever.

and you can still receive money with Lightning, you have to have your keys able to sign the new transaction to receive money. And so that gets really hard with like mobile devices. If you have like a mobile wallet, you have to like, know, open up your phone, open up the app to be able to receive the payment, which is, it's definitely a different user experience in terms of how that can kind of play out. So that's another consideration, the self-custodial side.

Jacob Brown (36:25)
That makes perfect sense. Okay, last few questions. We're deep in trying to figure out what consensus means for an op upgrade. Opcat was hot for a while, now it seems like with Jeremy throwing his name in the ring, we might get CTV plus check sig from stack. Any read from your view as a provider on what you like? Would you use all the above? How do you guys see this?

Graham Krizek (36:52)
Yeah, I mean, we haven't we haven't been as deep in the opcode conversations. I mean, like there's obviously ones that will be.

very helpful for Lightning and enabled us to do some new things. I think that a lot of them get some of what we want. We haven't been as involved in the different proposals. There was a while there, there was quite a few of them and there's quite a few debates around all of the different ones and it was hard to keep it straight. I think we've taken a backseat to that and we trust in the people that are working on those and proposing the right

the things and the proper discussions to happen on those.

I wouldn't say that I have strong feelings on which one's the best, which one's good, which one's not good. I think ultimately we, it seems like, it seems like we need to find some consensus around which one is likely the best and then start to do more thorough testing and integration and kind of going down the path of one of them. And I think at that point we would probably be like much more kind of in the weeds on what the ramifications are of it.

Jacob Brown (38:00)
I was similar as an investor where I was like, reading in the, you know, I'm on these esoteric forums trying to understand so I can frontrun the opportunity and I was like, oh wait, all this stuff is like at least two years out and I can grok it in 20 minutes and be totally fine.

Graham Krizek (38:12)
Yeah, yeah.

That's the problem is that to get these opcodes live on mainnet, it's a while. It just takes a lot of time to get these things through. so for us as a business, we're like, well, we can't wait two or three years to start developing a product and then make money. It's like, no, we got to solve problems that people are asking for us today. And so that's another reason why we've been very focused on what we're doing today rather than these things that are probably going to take a few years.

Jacob Brown (38:42)
Yep, yep, love it. Okay, last question. We've breezed through almost 40 minutes. This has been fantastic. What are you most excited about right now? It could be on Lightning, could be Bitcoin, just broadly, like what has you hyped right now?

Graham Krizek (38:58)
Yeah, I mean, I think it's still I'm incredibly bullish on lightning and I guess that's probably the most cliche answer I could have. But I think it is important because it's at a time where people are doing these like state chains or L2s or whatever and trying to like, you know, create their new thing. But

I've looked at all of them. I've read every white paper. I've looked at all of the different things and I'm still think that Lightning is the most bullish version of any of them and that can do the most for the network. So I'm just, very excited for this year and being able to onboard more and more customers into Lightning. Some really amazing like traditional financial.

payment processors, some new exchanges, a lot of different folks where I don't even think that we have scratched the surface on lightning adoption yet. I think we've done a fantastic job, but I think there's a lot more to go. And I think that, so I'm very bullish on getting lighting into the hands of more people and not necessarily trying to do that by like some new thing that's gonna like supposedly solve all the problems, which I don't think that they actually do. And so kind of like doubling down on

on lighting itself. that's kind of like, you know, the being there's like the people that are like OG Bitcoiners that like just like, you know, Bitcoin layer one and like that's like the cool thing to do. I don't want to say that we're kind of doing that on lightning because like people are building even further up the stack with some of these new things. But that's where we see the most value and that's where we see we're very interested in continuing to build on. So we think that that's where the most opportunity presents itself.

Jacob Brown (40:29)
Yeah, think when lightning works well and you have a good use case, it's almost indistinguishable from magic. you just do the thing, you know, like the one that got my wife to get kind of orange pills on this, was, you just had to fax to some whatever, you know, to do something. And so Bitcoin fax is great because you just upload the PDF and you scan the thing and I have to go walk over and like open my cash app and like, all here you go, babe. And scan the thing.

Graham Krizek (40:37)
Yeah.

Jacob Brown (40:56)
But it just works and it's done. Versus the alternative, which is like, if you try and send a fax by just Googling, you're gonna get sucked into a free trial that has a thousand free faxes, which you don't need. So like, when it works, it's amazing.

Graham Krizek (40:58)
Yeah.

Yeah.

Yeah, yeah, they're going to like they're going to try and sell you like a $20 a month subscription and it's like I just want to send this one thing and it yeah. Yeah. And so it's like I think that that's like the fantastic use case of that. Those are some of the things that people originally envisioned Bitcoin to solve for. And I think that, you know, through the years, it's definitely been like I think there's obvious challenges on doing everything on layer one of the slower transaction times, which are those are for a reason. And then the minor fees and all those things, those are all have good reasons to exist.

Jacob Brown (41:15)
Yep, gonna forget.

Graham Krizek (41:39)
But when you're trying to do this kind of internet native, really embedded finance, like lightning is the one, the thing that makes that all entirely possible. And so I agree, once you actually kind of experience that, it's pretty cool.

Jacob Brown (41:53)
Yep, one last question. You mentioned embedded finance and it got me thinking, one of the ways that I've been using it is like Stacker News where I'm filling up my kind of wallets. I can go zap people. And so I'm wondering, how do you think about UX when it comes to like scanning in real time to like pay for the thing versus having like kind of like a hot ish wallet that has most of your lightning sats. And then like you put them into

semi-custodial wallets on applications to not have to scan 20 times to do some behavior. Like how do you think about UX evolving over time with lightning?

Graham Krizek (42:32)
Yeah, I mean, I think that people have done a

pretty interesting job at solving some of those things like what NOS or wallet connect and some of that where you have like still have your own wallet but then able to like really easily link it up into a website or something. I think that there's more that can be done inside of that space. You don't always have to have like, you know, 20 wallets that each have like, you know, 5,000 sats that I'm in. You're trying to keep it all straight and whatnot. I think that there's some opportunity of having a much better experience. I do see people building out that. So I think that there is going to be a way I loved

What was it called? It's called like Jewel or something. It's like a lightning extension like way back in the day. That was like it's kind like a meta mask for lightning. I know Albie's kind of like getting like

closer to something like that, or they're, kind of like that. But I think that that kind of experience, we have like some kind of browser extension or something that you can easily interact with these websites and have a single wallet is like, I think that that's really cool. And then being able to couple that with like Nostra wallet connect and stuff will be a really powerful experience. So I think that there there's people working on it, which I'm excited for, and I'm really excited to see where that goes.

Jacob Brown (43:37)
All right, well, this has been great. Last kind of open question, any closing thoughts or things you want to riff on as it goes down?

Graham Krizek (43:47)
Yeah, I mean, I think that I know I think we've had a really great conversation. I think that we're we're definitely excited on lightning and then tap for assets coming to lightning. I think as as a lightning enthusiast, the thing that I'm it's like I always look for what are the things like outside of like my sphere and Bitcoin that I'm always like kind of interested in. I think the whole miner centralization debate around like pools and all those things is incredibly important. So I don't I don't have much thoughts besides like I mean, it's obviously very important and something that everyone should check out and like have

have kind of thoughts and opinions on and urge if you are a minor even just a small at-home minor to kind of talk to your pool about supporting things like stratum V2 or something similar to be able to more democratize Bitcoin mining so Just wanted to close it as I guess a PSA of like I think minor centralization is still a thing that we need to always be focused on Matt Corallo had a great presentation at Bitcoin 2024 last year around it. So

I'd encourage everyone to look that up. Because if miners completely get centralized, everything else on top doesn't matter. We can throw all this away if we really have a huge centralization inside of miners where transactions can be blocked or restricted or anything like that. So little bit of a soapbox there, but I think it's an important one that listeners should definitely check out.

Jacob Brown (45:06)
No, that's that's a good way to close it out I'll grab the link to that Matt Corrello talk and River just better report there will also be down below and they had an interesting Graph on that as well, which is that the top three mining pools are down like I think 8 % year-over-year in How much hash rights go into them and this other category is growing it might be ocean. It might be the bid ax movement so

Graham Krizek (45:12)
Awesome.

Mm.

Jacob Brown (45:33)
early stages of going in that direction, still very, very centralized. But yeah, that's a good reminder. Men, well, Graham, thank you so much for doing this. For people listening, I'll have links to everything we talked about down below. Go check out Voltage. But bullish on lightning. Thanks for coming on my show,

Graham Krizek (45:35)
Awesome.

Yeah, thanks a for having me. It was great.