Self-Custodial Yield on Lightning: Darius Koh at Lightning2049

ByRGB Team

At Lightning2049, a side event of Token2049 in Singapore, Darius Koh gave a talk about self-custodial yield on Lightning. Darius is co-founder of LNFI Network, a financial layer on top of the Lightning Network. LNFI supports assets issued with RGB Protocol on Bitcoin and Taproot Assets. In his talk, Darius explained why Lightning still lags behind, and how LNFI’s LN Node aims to close the gap.
Watch the full talk in the video below.

In Brief

  • The gap: about 5,000 BTC on Lightning, far behind Ethereum
  • Three challenges: low yield, fragmented asset protocols and complex node management
  • LN Node: a node service for self-custodial yield through channel mining
  • One node, many assets: RGB and Taproot Assets in a single place, with AI agents for management

Why Lightning Still Lags Behind

According to Darius Koh, the Lightning Network holds about 5,000 BTC, roughly 600 million dollars. Compared with Ethereum, the gap remains huge. In 2023, Taproot Assets launched on mainnet, and RGB did the same in 2025. Both protocols allow issuers to create assets on Bitcoin and move them over Lightning. As a result, they should help the network grow.

However, in his view, Lightning is not there yet, for three main reasons.

Three Challenges: Yield, Fragmentation and Node Management

First, yield on Lightning remains low. Liquidity providers earn roughly 1% to 4% a year. Meanwhile, many investors expect more than 10% on stablecoins and around 5% on bitcoin elsewhere. Lightning is a peer-to-peer network, so it depends on network effects. With fewer users, liquidity is thinner and payments cost more.

Second, asset protocols are fragmented. RGB, Taproot Assets, Runes and Spark’s LRC-20 all follow different rules, so users and developers face a scattered landscape.

Third, running a node is hard. Node operators need to manage their channels and rebalance them over time. For the average user, the work is far from easy.

LN Node: Self-Custodial Yield and Many Assets in One Node

To tackle the three challenges, LNFI Network presented LN Node, a node service for self-custodial yield. The main mechanism is channel mining. Users provide liquidity to the Lightning Network and earn routing fees, while they keep full control of their funds. Darius compared the idea to a bank account with some money in it, with one difference: the keys stay with the user. In his view, more nodes with more liquidity bring stronger network effects and lower execution costs. As a result, self-custodial yield can also make Lightning more competitive with other blockchains.

Besides, LN Node brings different asset protocols into one place. Users can manage RGB tokens and Taproot Assets in the same node, open RGB channels, and send and receive assets. As the documentation explains, an RGB Lightning channel can move RGB assets. Payments can also travel across channels, just like regular Lightning payments. In addition, LNFI Network plans trading features, and it has started a research collaboration with KaleidoSwap, a pioneer of self-custodial trading on Lightning.

Simpler Node Management, Even With AI Agents

Finally, LN Node aims to make node management easier. Users can run the node on their computer or server, or on the cloud with LNFI’s partners. Soon, a dedicated hardware device will be an option too. Access works through a Nostr address. Then, users manage the node through a web interface or a desktop app, with no command line.

Moreover, LN Node supports the Model Context Protocol (MCP). Thanks to MCP, users can manage the node through AI assistants such as ChatGPT, Claude or Cursor. For example, a user can ask an agent to open a channel of 500,000 satoshis. Similarly, an agent can pay an invoice within a maximum fee. According to Darius, LN Node is fully open source, and every new node makes the whole Lightning Network stronger.

The full talk is in the video above. For more videos from the RGB ecosystem, follow @RGB_Bitcoin.

Further Reading

Talk recorded at Lightning2049, a side event of Token2049, Singapore, October 2025. Video on the RGB Protocol YouTube channel.

logo-lnfi

Darius Koh

Co-founder of LNFI Network.

Similar Posts