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LN Channel Rewards

LN Channel Rewards require manual intervention by Lightning Node operators. Following the maritime theme of Plenny, in this scenario standard Lightning Nodes operate by hand like fishermen using a fishing rod. They โ€œfishโ€ in the port for Channel Rewards. This feature works as follows:

  • As a prerequisite for claiming LN Channel Rewards, Lightning Nodes must complete the initial verification.
  • Users apply manually for LN Channel Rewards, which are incentives for logging outbound capacity of Lightning Nodes when opening payment channels with Lightning Oracles.
  • Incentives depend on the duration and amount of sat locked up in noncustodial payment channels over the LN.

LN Channel Rewards serve as a free entry bonus for standard Lightning Nodes. In effect, this feature acts like a discount to facilitate participation in Plenny. In particular, the incentives encourage Lightning Nodes to join the capacity market as Liquidity Takers. Rewards can be used to license inbound capacity at a lower cost or be used for other use cases on the Dapp and crypto ecosystem. In detail it works as described below:

  • Lightning Nodes log their outbound capacity utilizing the NCCRmechanism. o By default, each channel qualifies for the Baseline Reward. This incentive applies even to low-volume channels with capacity ranging from X sat (e.g. +20,000) to X sat (e.g. 500,000).
  • Above the general reward threshold of X sat (e.g. 500,000) the General Channel Rewards Formula is applied, resulting in additional rewards known as LN Channel Rewards. Below this general reward threshold, payment channels can be opened, but only the Baseline Reward is granted.
  • Once Lightning Oracles have validated the capacity in the payment channel, LN Channel Rewards get locked on Plenny on a P2C-basis and released over time.
  • Participating Lightning Nodes generate LN Channel Rewards until the total rewards are collected or the payment channel is closed.
  • To avoid transaction spamming, no rewards are due if the payment channel is closed within 24h (e.g. โ‰ˆ6,500 blocks per day), encouraging connectivity with stable nodes.

The rewards period for channels and the minimum amount for initial verification are configurable and subject to governance voting.