A way to bring stablecoins to the Bitcoin Lightning Network (LN) is being evaluated, based on the fact that, although there are no native stablecoins, there are synthetic layer two stablecoins that can be used.
These currencies, which are financial products that imitate another without actually using it, can be generated from derivatives available on various exchanges that integrate LN, such as Kollidera company that allows perpetual contracts to be operated through the Lightning network and that spoke about these synthetic stablecoins in a thread of Twitter.
An example of how a synthetic stablecoin can be used would be by creating a contract that is worth 1 dollar (USD), but not using real dollars. In the case of a synthetic stablecoin, they can be created shorting a BTC per USD perpetual contract by the dollar amount to be hedged.
In detail, and as explained by Kollider, a bitcoin-only synthetic stablecoin is created by receiving payments in BTC and holding a balance of $10,000 in crypto at the end of a current month (assuming bitcoin is above $40,000). . Thus, you can take that sum (equivalent to just over 0.25 BTC) and sell it in dollars on reverse perpetual swaps with 1x leverage.
This can be done directly from an LN-enabled node or wallet to a Lightning-enabled exchange, taking advantage of the speed and immediacy of transactions running on that layer. Then, when bitcoin trades above $40,000, 0.25 BTC would be needed as margin to short $10,000 of BTCUSD inverse perpetual contracts at 1x leverage.
When you want to recover the USD 10,000, you only have to enter the exchange again and close the short position of that sum in dollars. This will allow the amount of bitcoins equivalent to USD 10,000 to be recovered..
“It is very possible that the Lightning network will have native stablecoins in the future, but synthetic stablecoins using bitcoin are already possible today,” Kollider emphasized.
It is not a stablecoin, but it would be walking there
Given Kollider’s considerations, several bitcoiners weighed in on Lightning stablecoins. Manuel Ferrari was one, who he claimed that because of the custodial characteristic of Kollider’s service, can’t talk about a stablecoin.
“A balance that offsets derivative positions in a custodial app is not a stablecoin. There is no token, it is not tradable, it is not fungible,” he said, in response to the Lunaticoin podcaster, who he saw welcomes Kollider’s thread.
coincided with Nicholas Bourbon. For him, what Kollider proposes cannot be compared to effectively having a token in LN that can be moved from one wallet to another without any custody.
You have to be careful. They can’t call it a stablecoin because there is no “coin” and that can confuse a user. Here we are talking about a custodial service that, in addition, since there is no KyC, is a custodial service that can disappear at will with your “stables”.
Nicholas Bourbon, bitcoiner.
For Lunaticoin, the interesting thing that Kollider talks about are the paths that are glimpsed “where a native LN stablecoin will come from.” “It is not so much about accepting custody services, but about knowing what idea this concession will take.”