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Channel Licensing

In legal terms, channel licensing is an arrangement through which a licensor licenses transaction data services via payment communication channels to a licensee.

Using Plenny, Lightning Nodes provide connection access to payment communication channels which allow for sharing transaction data. Transaction data consist of information about node ID, channel ID, channel capacity, and licensing fees.

The arrangement among users concerns the right to use channel capacity but does not include custody or transfer of third-party funds. Channel licensing occurs on a non-custodial basis and is based on P2P and P2C transactions between Lightning Nodes using the Lightning Network for channel capacity and their Ethereum wallet for payments in PL2.

As Royalties are invoiced in PL2, Plenny’s licensing model for inbound capacity is technically understood to represent a tokenized licensing agreement for transaction data services via payment communication channels.

In terms of compliance, Lightning Nodes providing inbound capacity are software service providers but do not qualify as financial intermediaries subject to regulation.