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CashApp is making nearly 10% APR (aka yield) on its bitcoin via lightning
2132 sats \ 29 comments \ @k00b 28 May lightning
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(Bummed that I missed this talk.)
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358 sats \ 3 replies \ @bigrouter 29 May
This has nothing to do with the sort of routing that pretty much any other node in the network is doing.
The c= node has an exclusivity deal with CashApp so all their users's payment have to go through c=.
If the CashApp nodes would be open to accept channels from anyone the c= APR would be much lower because their entire operation depends on the special setup.
It's basically a combination of an accounting trick combined with obfuscated fees for the CashApp users.
CashApp could just charge their users a spending fee but instead they do not and split it of to c= which then claims to earn by "routing".
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5 sats \ 1 reply \ @SimpleStacker 29 May
Thanks for the insight.
So does this mean CashApp users tend to pay higher than normal routing fees to use the lightning network, compared to if you utilized your own node?
Or would it mean that people sending to CashApp wallets will pay routing higher fees because they have to go through c=?
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45 sats \ 0 replies \ @bigrouter 29 May
They are likely to pay higher fees compared to other services/wallets that have direct channels to the destinations they want to reach. To pay a CashApp user it's also very likely that you have to pay more compared to other services.
The c= node adds an extra hop to every route that goes from/to the CashApp nodes. Fees c= charges are 1000 to 3000 ppm, so 0.1 to 0.3 percent is added to each payment.
Since most of the volume CashApp produces is sending, the c= node gets outbound heavy so they have to close the channels that the CashApp nodes open. They use the funds from those closed channels to open new channels to the destinations the CashApp users want to reach. This is how they are able to earn so much from "routing".
Originally CashApp did only peer with select nodes because of legal and compliance reasons. I guess at some point they figured they could earn a bunch if they put a node running LDK between them and the rest of the network. It's frankly a bit strange how they act like they earn from routing while they are just an exclusive gatekeeper for CashApp lightning.
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0 sats \ 0 replies \ @SwapMarket 29 May
This
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107 sats \ 1 reply \ @OT 29 May
Hmmm, I remember seeing recently LNbig posting that they make about 1%. How is this result so different?
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218 sats \ 0 replies \ @k00b OP 29 May
Similar reason as to why Jeff Bezos is so much wealthier than all of us I imagine.
I think part of the confusion stems from all us thinking about routing nodes like bitcoin miners - if you have the same energy cost and hashrate and hashrate efficiency, you’ll make the same as anyone else with similar stats.
Routing nodes have many more degrees of freedom so outcomes will vary wildly.
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31 sats \ 0 replies \ @denlillaapan 28 May
where is the yield coming from?!
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25 sats \ 0 replies \ @BlokchainB 28 May
Proud owner of block shares. As part owner I am happy with this performance and I can’t wait for this Sat yield to be paid out via dividends!
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59 sats \ 14 replies \ @SimpleStacker 28 May
What how
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55 sats \ 13 replies \ @kepford 29 May
Routing payments would be my guess. Is that it @k00b?
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0 sats \ 12 replies \ @kepford 29 May
My node is not giving me yield :) not in sats at least.
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164 sats \ 11 replies \ @SimpleStacker 29 May
10% yield seems pretty high for a node, since the average fee rate is about 0.1%. So to get a 10%/year yield from routing, you'd have to turn over your entire channel capacity 100 times per year? I guess that's possible
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170 sats \ 8 replies \ @south_korea_ln 29 May
Back when I was still running my node, I was at 12% APY when I was providing liquidity to LOOP. From what I gather from the related Telegram groups, this seems to be still quite a profitable endeavour. My largest channels would be depleted several times per day.
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10 sats \ 7 replies \ @OT 29 May
Might be a bit personal, but did you put up a lot of capital?
I'm wondering if this is because of their size.
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173 sats \ 0 replies \ @k00b OP 29 May
They have a few engineers and some cracked ML folks working on optimizing it apparently. They also do a lot of volume as custodial wallet.
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0 sats \ 0 replies \ @kepford 29 May
I'm very curious about it as well. Maybe they sell inbound channels as well.
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0 sats \ 0 replies \ @Cje95 29 May
I read this as using CashApp you could make a 10% yield and I was about to be shook
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0 sats \ 0 replies \ @Riberet 29 May
Incredible, 10% is too much, I would like to know how they are doing it exactly.
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0 sats \ 0 replies \ @pbl4eagain 29 May
impressive
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0 sats \ 1 reply \ @k00b OP 28 May
found a slightly better screenshot here
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0 sats \ 0 replies \ @nitter 28 May bot
https://xcancel.com/nick_slaney/status/1927820651970117881
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0 sats \ 0 replies \ @nitter 28 May bot
https://xcancel.com/RyanTheGentry/status/1927795177759928763
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