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From: Chris Stewart <chris@suredbits.com>
Date: Sun, 6 Mar 2022 14:53:55 -0600
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To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Subject: Re: [bitcoin-dev] Recurring bitcoin/LN payments using DLCs
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FWIW, the initial use case that I hinted at in the OP is for lightning.

The problem this company has is they offer an inbound liquidity service,
but it is common after a user purchases liquidity, the channel goes unused.

This is bad for the company as their liquidity is tied up in unproductive
channels. The idea was to implement a monthly service fee that requires the
user to pay a fixed amount if the channel isn=E2=80=99t being used. This
compensates the company for the case where their liquidity is NOT being
used. With standard lightning fees, you only get paid when liquidity is
used. You don=E2=80=99t get paid when it is NOT being used. If you are offe=
ring
liquidity as a service this is bad.

The user purchasing liquidity can make the choice to pay the liquidity fee,
or not to pay it. In the case where a user does not pay the fee, the
company can take this as a signal that they are no longer interested in the
service. That way they can put their liquidity to use somewhere else that
is more productive for the rest of the network.

So it=E2=80=99s sort of a recurring payment for liquidity as a service, at =
least
that is how I=E2=80=99m thinking about it currently.

On Sun, Mar 6, 2022 at 2:11 PM ZmnSCPxj <ZmnSCPxj@protonmail.com> wrote:

> Good morning Chris,
>
> > >On the other hand, the above, where the oracle determines *when* the
> fund can be spent, can also be implemented by a simple 2-of-3, and called
> an "escrow".
> >
> > I think something that is underappreciated by protocol developers is th=
e
> fact that multisig requires interactiveness at settlement time. The
> multisig escrow provider needs to know the exact details about the bitcoi=
n
> transaction and needs to issue a signature (gotta sign the outpoints, the
> fee, the payout addresses etc).
> >
> > With PTLCs that isn't the case, and thus gives a UX improvement for
> Alice & Bob that are using the escrow provider. The oracle (or escrow) ju=
st
> issues attestations. Bob or Alice take those attestations and complete th=
e
> adaptor signature. Instead of a bi-directional communication requirement
> (the oracle working with Bob or Alice to build the bitcoin tx) at
> settlement time there is only unidirectional communication required.
> Non-interactive settlement is one of the big selling points of DLC style
> applications IMO.
> >
> > One of the unfortunate things about LN is the interactiveness
> requirements are very high, which makes developing applications hard
> (especially mobile applications). I don't think this solves lightning's
> problems, but it is a worthy goal to reduce interactiveness requirements
> with new bitcoin applications to give better UX.
>
> Good point.
>
> I should note that 2-of-3 contracts are *not* transportable over LN, but
> PTLCs *are* transportable.
> So the idea still has merit for LN, as a replacement for 2-fo-3 escrows.
>
> Regards,
> ZmnSCPxj
>

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<div dir=3D"auto">FWIW, the initial use case that I hinted at in the OP is =
for lightning.</div><div dir=3D"auto"><br></div><div dir=3D"auto">The probl=
em this company has is they offer an inbound liquidity service, but it is c=
ommon after a user purchases liquidity, the channel goes unused.</div><div =
dir=3D"auto"><br></div><div dir=3D"auto">This is bad for the company as the=
ir liquidity is tied up in unproductive channels. The idea was to implement=
 a monthly service fee that requires the user to pay a fixed amount if the =
channel isn=E2=80=99t being used. This compensates the company for the case=
 where their liquidity is NOT being used. With standard lightning fees, you=
 only get paid when liquidity is used. You don=E2=80=99t get paid when it i=
s NOT being used. If you are offering liquidity as a service this is bad.</=
div><div dir=3D"auto"><br></div><div dir=3D"auto">The user purchasing liqui=
dity can make the choice to pay the liquidity fee, or not to pay it. In the=
 case where a user does not pay the fee, the company can take this as a sig=
nal that they are no longer interested in the service. That way they can pu=
t their liquidity to use somewhere else that is more productive for the res=
t of the network.</div><div dir=3D"auto"><br></div><div dir=3D"auto">So it=
=E2=80=99s sort of a recurring payment for liquidity as a service, at least=
 that is how I=E2=80=99m thinking about it currently.=C2=A0</div><div><br><=
div class=3D"gmail_quote"><div dir=3D"ltr" class=3D"gmail_attr">On Sun, Mar=
 6, 2022 at 2:11 PM ZmnSCPxj &lt;<a href=3D"mailto:ZmnSCPxj@protonmail.com"=
>ZmnSCPxj@protonmail.com</a>&gt; wrote:<br></div><blockquote class=3D"gmail=
_quote" style=3D"margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left=
-style:solid;padding-left:1ex;border-left-color:rgb(204,204,204)">Good morn=
ing Chris,<br>
<br>
&gt; &gt;On the other hand, the above, where the oracle determines *when* t=
he fund can be spent, can also be implemented by a simple 2-of-3, and calle=
d an &quot;escrow&quot;.<br>
&gt;<br>
&gt; I think something that is underappreciated by protocol developers is t=
he fact that multisig requires interactiveness at settlement time. The mult=
isig escrow provider needs to know the exact details about the bitcoin tran=
saction and needs to issue a signature (gotta sign the outpoints, the fee, =
the payout addresses etc).<br>
&gt;<br>
&gt; With PTLCs that isn&#39;t the case, and thus gives a UX improvement fo=
r Alice &amp; Bob that are using the escrow provider. The oracle (or escrow=
) just issues attestations. Bob or Alice take those attestations and comple=
te the adaptor signature. Instead of a bi-directional communication require=
ment (the oracle working with Bob or Alice to build the bitcoin tx) at sett=
lement time there is only unidirectional communication required. Non-intera=
ctive settlement is one of the big selling points of DLC style applications=
 IMO.<br>
&gt;<br>
&gt; One of the unfortunate things about LN is the interactiveness requirem=
ents are very high, which makes developing applications hard (especially mo=
bile applications). I don&#39;t think this solves lightning&#39;s problems,=
 but it is a worthy goal to reduce interactiveness requirements with new bi=
tcoin applications to give better UX.<br>
<br>
Good point.<br>
<br>
I should note that 2-of-3 contracts are *not* transportable over LN, but PT=
LCs *are* transportable.<br>
So the idea still has merit for LN, as a replacement for 2-fo-3 escrows.<br=
>
<br>
Regards,<br>
ZmnSCPxj<br>
</blockquote></div></div>

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