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Bitfinex invests in Derivatives exchange built on Bitcoin’s lighting network

Photo of: Sangeetha Golchha
by Sangeetha Golchha

LN markets, a crypto derivatives exchange that have been built on top of Bitcoin’s lightning network, have apparently raised a great deal of money. The funds generated were done so in the pre-seed round and the amount is still kept under the wraps. 

The pre-seed round was participated in by the crypto exchange Bitfinex along with investment firms like Arcane crypto and Fulgur Ventures. LN platform now possesses fresh funds to develop its platform to offer a much superior trading experience to users. LN markets were officially launched this year in March. It will help traders to trade directly through a lightning wallet. Traders enjoy instant access to Bitcoin markets, claim profit or loss in a trust-minimized ecosystem. The risks with counterparties are reduced to its barest minimum.

More about Lightning network

Long way back in history when the telegram used to be a thing it was considered the most effective way to communicate long-distance. So, all you had to do was to visit your local post office and get your message sent. The message was paid for, depending on the number of letters, and between the send and receive there were many points which were touched. So, it meant more people in the loop, delays in transmitting the message, and the additional burden of costs. This sounds very similar to what happens in the cryptocurrency industry. In this analogy, the lightning network plays a prominent role.

To cut to the chase, the idea behind the Bitcoin Lightning Network is that we do not have to keep a record of every single transaction on the blockchain. Instead the lightning network adds another layer to Bitcoin’s blockchain which lets users generate payment channels between any two parties on that extra layer. 

Bitfinex investment

The CTO of Bitfinex, Paolo Ardoino was quoted as saying;

“When we look at a project such as LN Markets, we see a direct application of the technologies that we love. It is therefore important for us to provide funding and to participate in such an innovative venture.”

LN Market was developed by bitcoin startup ITO. It currently has trade limitations set at 0.01 bitcoin per trader. The exchange also confirmed that its users have already executed more than 25,000 trades with a clocked-in volume of $10 million.

The new platform is designed in order to avoid extremely slow and costly on-chain transactions. It will directly connect traders with a bitcoin derivatives market through the lightning network and streaming their funds. The funds have not been disclosed by LN markets as yet and we will be the first ones to update if the amount gets disclosed. But, as of now, officials from LN Markets have sealed their lips on the amount.

In a presentation shared with CoinDesk, it was highlighted that the exchange will offer up to 50x leverage. From any lightning network wallet, users can easily trade. By directly linking users’ wallets to the derivatives exchange, it will let users operate with their funds.