LOC Capacity Market
The capacity market is branded as Lightning Ocean (LOC). It is decentralized, permission-less, and non-custodial. Plenny’s capacity market for payment channels facilitates the licensing of inbound capacity and enables Lightning Nodes to collect Royalties and earn LOC Channel Rewards in PL2.
The roles of the participants in the capacity market are clearly defined: Liquidity Makers act as licensors to share their capacity with Liquidity Takers who act as licensees and pay Royalties for the same.
To clarify, the capacity market is not an exchange with a matched order book. Instead, it is a decentralized peer-to-peer marketplace. Makers post their outbound capacity to provide inbound capacity to Takers in sat and quote the Royalties in PL2. Takers can opt to take the offer or not.
In summary, the capacity market works as follows:
- Lightning Nodes act as Liquidity Makers or Takers.
- The cost for inbound capacity is reflected in the Royalties (i.e. licensing fees paid by Takers).
- Royalties are subject to market demand and are therefore negotiable: Makers are free to post an asking price, Takers can accept or offer a bid price.
- Royalties are paid in PL2 serving as the payment token of the capacity market.
- Inbound capacity is provided in sat over the LN.