Trading on Lightning: Federico Tenga at Lightning2049
At Lightning2049, a side event of Token2049 in Singapore, Federico Tenga of Bitfinex gave a talk about trading on Lightning. In his view, trading is the most realistic way to grow the Lightning Network. Moreover, RGB Protocol on Bitcoin provides the missing piece: assets other than bitcoin.
Watch the full talk in the video below.
In Brief
- Bitcoin yield: Lightning node operators earn fees in bitcoin, with no counterparty risk
- The limit: today, Lightning has too little volume for yield at a large scale
- The solution: trading on Lightning, with stablecoins and other RGB assets
- The advantages: fast, cheap and private trades, with no front-running
How to Earn a Yield on Bitcoin With Lightning
Many investors want to earn more than a simple bitcoin investment. For this reason, they tried with altcoins at the beginning, while today, they often buy shares of treasury companies.
According to Federico Tenga, the above strategies add a lot of risk. In fact, many investors end up with lower returns than if they had simply kept their bitcoin.
On the other side, Lightning offers a safer option. To route payments, the network needs nodes that lock bitcoin in payment channels. These nodes collect a small fee on every payment through their channels. As a result, node operators earn a return in bitcoin and keep their bitcoin exposure at the same time, and the risk stays low. There is no counterparty and no lock-up, so operators can close their channels and take their bitcoin back at any moment. The main cost comes from the infrastructure, which weighs little at a large scale.
From Low Volume to Trading on Lightning
There is a problem, though: today, Lightning does not have enough volume to sustain a large yield market. Most people who hold bitcoin prefer to keep their coins.
Merchants face price volatility, taxes and accounting complexity. In addition, bitcoin payments now compete with stablecoin payments. For these reasons, payments alone cannot generate enough volume on Lightning.
According to Federico Tenga, the most realistic solution is trading on Lightning. Many people are far more interested in trading than in paying with bitcoin. Besides, traders move large amounts of capital, so they can generate much more volume than payments. Traders also accept a less smooth user experience, because they expect a profit in return. For a technology with room for improvement in usability, traders are therefore ideal early users.
RGB Brings New Assets to Lightning
Trading needs at least two assets, and with bitcoin alone there is nothing to trade. Here, RGB plays a key role, as it allows issuers to create assets such as stablecoins on top of Bitcoin. Then, Lightning channels can move RGB assets, as the documentation explains in detail.
Once stablecoins and other assets run on Lightning, users can exchange them for bitcoin through atomic swaps, where either both sides of the trade happen or neither does, so no party can run away with the funds.
Faster, Cheaper and More Private Than DEXs on Other Chains
According to Tenga, trading on Lightning can offer a better experience than decentralized exchanges on Ethereum and other EVM chains.
On those chains, every trade becomes a public transaction, with a wait for the next block and on-chain fees. Even worse, everyone can see the trade before the confirmation, so bots can use the information to front-run the trader.
On Lightning, instead, trades happen off-chain. Therefore, there is no wait for block confirmations and no on-chain fee. Above all, trades stay private: only the two parties know about the trade. Even the nodes that route the payment only see a transfer of bitcoin or USDT. In addition, liquidity providers can set prices with any algorithm, without the limits of the AMM formulas on Ethereum.
From Trading Volume to a Stronger Lightning Network
Trading also creates routing on both sides of every trade, in stablecoins and in bitcoin. As a consequence, node operators collect more fees, and more yield attracts more investment in Lightning infrastructure. In turn, better infrastructure brings a better experience for payments as well.
According to Tenga, this cycle can take Lightning out of its niche in a sustainable way. The pieces of the puzzle are already in place: RGB is live on mainnet, and projects such as KaleidoSwap are building DEXs on Lightning. Now, the next step is to make all the parts work smoothly together, with tools for use at scale.
The full talk is in the video above. For more videos from the RGB ecosystem, follow @RGB_Bitcoin.
Further Reading
- USDT on the Lightning Network: Why It’s Good for Lightning Itself
- RGB HUB Community Call – KaleidoSwap: DEXs on Bitcoin with Lightning-Powered Swaps
- Lightning Network as the Common Language of Bitcoin Layers
Talk recorded at Lightning2049, a side event of Token2049, Singapore, October 2025. Video on the RGB Protocol YouTube channel.
