The Future of DEXs on Bitcoin: LNFI Network and KaleidoSwap on RGB

On July 9, 2026, RGB Hub hosted a community call on decentralized exchanges with Darius, co-founder of LNFI Network, and Emile, head of growth at KaleidoSwap. MariJ and Birk moderated the conversation on self-custody, liquidity, compliance, and the arrival of USDT on RGB Protocol on Bitcoin.
Watch the full video at the top of the page for the whole discussion.

In Brief

• DEX vs CEX: on a Bitcoin DEX, users keep their assets in self-custody for the whole trade, with no rollback and full transparency
• Liquidity: the main challenge, with funds split across Bitcoin layers and low Lightning withdrawal limits on centralized exchanges
• Two approaches: LNFI Network covers the full life cycle of an RGB asset, KaleidoSwap builds an SDK for other wallets
• USDT on RGB: for both guests, the key to more liquidity, lower spreads, and new users
• Interoperability: orders routed between the two exchanges toward the better price

The Conversation in a Few Words

In 54 minutes, Darius and Emile compared decentralized and centralized exchanges, described the role of RGB in their products, and listed the missing pieces for wider adoption. In addition, the call covered the legal gray area around DEXs and the expected effect of USDT on Bitcoin.

Why a Decentralized Exchange Instead of a Centralized One?

Darius listed three main differences between a DEX and a CEX.

• The first one was custody: on a DEX, users keep the assets in their own wallet during the trade, and an atomic transaction sends the result straight back to them. On the contrary, on a centralized exchange, the deposit stays with the exchange, which only keeps an internal ledger of balances.
• The second one was rollbacks: a centralized exchange can unwind trades after a loss on its side, while on a DEX the assets are already in the individual wallets.
• The third one was transparency: after a deposit on a centralized exchange, users have no view of the movement of their funds.

Emile also added sovereignty, privacy, and security: with no company in control of user funds, he explained, a DEX leaves no room for cases like Mt. Gox or FTX. Moreover, access is permissionless and with no KYC, which is an important point for the millions of people with no documents or no access to basic financial services in their country.

Liquidity, the Hardest Problem

For Emile, the first step was to bring together the liquidity split across Bitcoin layers. KaleidoSwap started with RGB only, then added Arkade and Spark. Besides, at the time of the call, Liquid was close to release. Next, mostly in 2027, the team wants to attract external market makers, with a good return on their capital and the same benefits of self-custody as any other user.

Darius saw two obstacles. Centralized exchanges put low limits on Lightning withdrawals: LNFI users could move only 0.01 BTC at a time from Binance, too little for trading. And market makers from other blockchains knew little about Lightning, so the market looked too small to them. Both guests, however, saw a way out in the “Matthew effect”, as Darius called it: liquidity attracts more liquidity, and USDT could set the process in motion for RGB, Lightning, and Bitcoin.

Two Ways to Build a DEX on RGB

LNFI Network built for the end user, with the whole trading experience in one place. At the time of the call, most of its trading services were still custodial. Every execution went out as a Nostr command, so users could follow every movement of the funds, and the next goal was self-custody trading through Lightning swaps and an Ark server. With RGB, LNFI wanted to cover the whole life of an asset: issuance with LN Issue, distribution through airdrop campaigns with LN Starter, trading on its peer-to-peer marketplace and on the LN Exchange order book, and a node service for asset channels.

KaleidoSwap took the opposite road and focused on infrastructure. Along with a browser extension and a desktop app, and with mobile and web apps on the way, its main product was an SDK for other wallets, neobanks, and fintech apps, with RGB and the RGB Lightning Node at the core of the backend. Emile recalled the first RGB swap on Lightning mainnet, made by KaleidoSwap in September 2025, and spoke about his work as a designer to make the product easier for end users. KaleidoSwap, he added, had no token of its own.

Compliance in a Gray Area

For Darius, the rules for DEXs and Lightning were still a gray area, different in every jurisdiction. LNFI blocked IP addresses from countries with a clear license requirement for custody, and saw self-custody as the safest path. A lawyer in New York had also warned him that, in the US, routing liquidity through a Lightning node could count as a regulated service.

Emile’s approach was similar: pick a jurisdiction that allows the service, avoid marketing in countries with stricter rules, such as the EU under MiCA, keep the code open source, and never hold user funds.

The Impact of USDT on RGB

Emile expected USDT to open the door to more advanced trading on Bitcoin, such as DCA and limit orders. Both were already in the KaleidoSwap desktop app at the time, also through an AI agent that takes instructions by text or by voice. For payments, one wallet for both bitcoin and USDT would make life easier: users could keep their savings in bitcoin and switch to USDT only at the moment of a payment.

For Darius, USDT meant liquidity. More liquidity would bring more users, market makers, and payment providers, with lower spreads and a stronger position for Bitcoin, Lightning, and RGB against other blockchains. LNFI planned to use RGB-native USDT as collateral for perpetual trading on the LN Exchange, to support USDT across all its products, and to integrate the Utexo SDK.

Interoperability Between the Two Exchanges

The last question came from Telegram: would there be a direct connection between LNFI and KaleidoSwap? Both guests answered with routing. An order placed on one exchange could go through the other one in case of a better price there, so liquidity would stay in a single pool and prices would match on both sides, with no need for arbitrage. The two teams could also share technology, for swaps on protocols supported by only one of the two.

At the time of the call, the KaleidoSwap browser extension was in closed beta on mainnet, with support for Arkade, Spark, and Lightning, and it could connect to an RGB Lightning Node through the desktop app. The desktop app and the SDK were still on testnet. For the latest status, visit kaleidoswap.com and lnfi.network.

The full video is at the top of the page. For news on RGB, follow @RGB_Bitcoin. New to RGB? Start with What is RGB Protocol on Bitcoin.

Further Reading

• Darius of LNFI Network on Bitcoin, Nostr, and Why RGB Was the Missing Piece
• Trustless Trading on Bitcoin: RGB Assets and Atomic Swaps
• The Business Case for USDT on Bitcoin: Utexo’s Bet on RGB and Lightning

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Community call recorded on July 9, 2026, hosted by RGB Hub (now @RGB_Bitcoin).