Research Gap

Although Bitcoin’s second-layer protocol has attracted a number of academic researchers from the world’s leading universities to publish scholarly papers on the theoretical concepts of the LN, only a few computer scientists have conducted public online field experiments to explore the potential of lightning payments for real-time transactions in a blockchain interoperable environment. Until now, only a few analysts and programmers have researched how interoperability with Ethereum smart contracts might benefit the LN, and how the two blockchains might cross-fertilize in practice.

Contemporary research has looked at network topologies for P2P, where fiat transactions are processed through centralized financial intermediaries. Researchers have investigated the social aspects of mobile payment applications, user adoption, and the growth of transaction volume where participants are empowered to transact directly with their community.

To date, however, the impact of cryptocurrencies and the multilayered ramifications of blockchain topologies on the framework of conventional P2P payment systems have not yet been adequately studied. In many respects, existing theory regarding the LN has hardly been applied on a practical level and placed in a technical, economic, and legal context. In the fields of applied computer science, monetary economics, and law, the composability of Ethereum standards in interaction with the LN has not yet been thoroughly analyzed for functionality and compliance. Concretely, the characteristics of the LN and the behavior of Lightning Nodes within the broader crypto community is unexplored in terms of providing tools for transacting with other decentralized applications and blockchains.

Apart from Bitcoin, Litecoin, and RSK, there are currently no blockchains and no interoperable cryptographic coins or tokens to support the growth of the LN and leverage its capability for on-chain and off-chain payments. The impact of add-on services with product layers using complementary tokens is uncharted territory. The Plenny experiment addresses this research gap by looking for novel decentralized use cases and add-on application-level services utilizing tokenization.

From the user’s perspective, decentralized networks like the LN are expected to offer value via the protocol and product layer. Currently, the protocol and product layers of the Bitcoin Lightning Network are not yet sufficiently intertwined. This state is reflected in limited usability and consequently affects the utility of the LN. Sat works well as a native coin of the lightning protocol, but in practice offers limited opportunities and insufficient incentives for nodes to compose innovative product layers.

Plenny assumes, aside from payments and trading, there are additional ways to create value. To support the utility of the LN, the experiment enables Lightning Nodes to provide add-on services. The additional economic activity is intended to create value that can be captured at the protocol level of the LN as well as on the service level of Plenny by collecting transaction fees.

To sum up, the pilot explores new decentralized use cases on the LN and via decentralized applications to create further utility and additional value-capture mechanisms through interoperability with the Ethereum ecosystem.