{ "episodeId": "SLP739", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "chris_ritter": { "name": "Chris Ritter", "role": "guest", "tag": "CHRIS" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.18, "text": "I've been commenting about this recently as well, that I think even this so-called debate between, so-called, MOE and SOV, like it's a fake fight, like it's really, it's actually fake. It's like, yes, people argue about it online, but, you know, in the real world, in practice, people aren't actually seriously fighting and arguing about that, like it's just not a thing. Hi everyone, and welcome back to Stephan Livera podcast. Today I'm joined by Chris Ritter, Chief Strategy Officer at Zeus, and we are gonna be talking a bit about Lightning, economics and yield on the Lightning Network. And now, maybe long-time listeners you'll know, you know, there have been people talking about this idea for years and years and years. I think like one of the first few episodes back in like, you know, episode seven or something of my podcast, I had Nick Bhatia on. You know, this is back in 2018. So This conversation has been ongoing, but, Chris is joining us, and Chris recently wrote this piece called Lightning Economics. It's a report for ZUUS, and I thought there were some interesting stats and things to pull out from it. So first off, Chris, welcome to the show." }, { "speaker": "chris_ritter", "time": "01:06", "start": 65.72, "text": "Stefan, thanks for having me. And yeah, your, your podcast was one of the, the first in, in my rolodex of podcasts, so it's kind of surreal to be on it, so I appreciate it. And yeah, going back to Bhatia, I remember listening" }, { "speaker": "stephan", "time": "01:22", "start": 81.85, "text": "often say nowadays. so look, let's just, I guess let me set a little bit of the context for people, at least how I, how I read this situation, and then you can maybe add on from there. So there are already certain treasury companies and people doing some related things. So obviously there is LQWD in Canada, they're a Bitcoin treasury company doing routing as part of their model. There's BeHodl in the UK, and also Block, right? So I think one or maybe two years ago, one or two years ago, Miles From, Kasha Block Square, I guess the overall company is called Block. He came out and talked about his numbers, in terms of the yield. And so that was kind of like, \"Oh, whoa, actually there's like, there's, there's some volume here in Lightning.\" And so that was kind of interesting for people. And then, now Zeus is a, you know, a well-known Lightning wallet. Let's say most people know it as a Lightning wallet, although obviously there's more to it. so can you kind of jump off from there, tell" }, { "speaker": "chris_ritter", "time": "02:22", "start": 141.75, "text": "Yes, Stefan. There's, there's a lot to unpack there, so feel free to cut me off and, and let's narrow it down at any point. But I think big picture, you're right, you named three companies that are doing what I would term native yield in terms of putting your Bitcoin to work, but that's three companies out of a hundred and twenty public companies, you know, and there are more if you go private companies that are actually holding Bitcoin on the balance sheet. So even though we can name a few, I don't think it's anything close to being a commonplace thought process Getting into Zeus, thinking about, okay, how are these treasury companies looking at Bitcoin on the balance sheet and putting it to work? I thought, all right, well, what are the frameworks they're already operating on? And as I started to dig into that, I realized, well, there's not a lot of even structured frameworks that people are thinking through. They're just kind of following the leader. And, and obviously, we know the biggest and loudest voice in the last years has been Saylor with Strategy, and I felt that there was a trap that the companies were automatically falling into of thinking this" }, { "speaker": "chris_ritter", "time": "03:21", "start": 201.39, "text": "From the start, this report, it's not saying this is the only route. I'm saying you need to think about, there are many frameworks to put Bitcoin to work on your balance sheet. And so I really think, Stefan, we have three buckets right now. It's digital credit, derivatives, and native yield. And those three frameworks, I think are, are the frameworks to look at treasury companies and how they're applying Bitcoin. And I, I talk about this in the report, I think a lot of companies fell into whatever playbook was at vogue in the time And so if you came in and you had Bitcoin on the balance sheet pre-2020, and most of these are mining companies, you went the derivatives route because that was pretty much the only way you could get a return on your Bitcoin. And then Sailor started pioneering this digital credit strategy in 2020 through 2024, that was the predominant one. And we're only really talking about this native yield strategy, Stephan, in the last year, so because of the developments in Lightning Network, it, it wouldn't be possible to have this conversation in 2022 or Things are developing. Sometimes if, if you're just head down, and I get it, if you're running a business, you got a lot of things on your plate, you don't have time to go and see what's the development on the technical side. But I really think now you have three legitimate buckets to go about putting your Bitcoin to work, and then it's really a matter of what is the risk profile, what is the return profile you're looking for, and then we can have more nuanced conversations about it." }, { "speaker": "stephan", "time": "04:45", "start": 284.89, "text": "Gotcha. So, yeah, as you, as it's an interesting way to" }, { "speaker": "stephan", "time": "04:51", "start": 291.39, "text": "People are thinking about a Bitcoin company or some kind of Bitcoin business or a Bitcoin treasury strategy. I guess there's different ways to think of that. It's either just you are just earning, you know, Bitcoin directly, like if you are a Bitcoin company that is doing a Bitcoin service, or you could just be, you know, like a SpaceX, or, you know, like you could just be earning money and just buying some Bitcoin and" }, { "speaker": "chris_ritter", "time": "05:12", "start": 311.93, "text": "operating company, but you, you actually have an operating business, yeah, if you are operating company" }, { "speaker": "stephan", "time": "05:16", "start": 316.17, "text": "as opposed to a company trying to make sats from sats per se And then, so that's kind of on the operating, as you said, on the operating company side of things. And then, I guess you're also getting to this question of Bitcoin is just sitting there, and this is actually a common line of criticism, \"Hey, Bitcoin has no yield, and therefore the Goldbugs and other, or whatever else. I mean, maybe not so much Goldbugs, but other people in TradFi will look at the Bitcoin industry and say, \"Hey, look, this Bitcoin thing, there's no yield.\" How would you answer that?" }, { "speaker": "chris_ritter", "time": "05:47", "start": 346.87, "text": "Yeah, no, Stefan, and We're talking about Bitcoin hyperization, however you define that and whatever that looks like, at some level, Bitcoin is going to enter more of the financial realm, and so you have to map and be able to bridge to Trabfi of what this looks like. And I'm not saying it's gonna be always a one-to-one comparison, and I, I, I hit that head-on as I was making the report because sometimes it was very hard to do an apples-to-apples comparison, and so I tried my best to kind of lay that out and make sure it was a comparison that would- make sense to be able to translate, and I think that's the main thing we need to think about is how are we translating it into what a lot of financial professionals are looking at, CFOs in particular, how are they looking at the balance sheet and how are they looking at putting it to work? And when we look at yield, like I said, I think there are three main frameworks you can look at, and then it's more a matter of once you understand that, let's dig deeper and look at what is the risk profile and how does it then impact the Bitcoin based on Bitcoin's properties." }, { "speaker": "stephan", "time": "06:51", "start": 410.79, "text": "I and now probably another common confusion will just be if people are coming from the world of Bitcoin treasuries, they may be thinking of, of the concept of BTC yield, and that may be more like- That's different to this kind of, to Lightning yield. So can you just kind of explain for people the difference there between, let's say, when Michael Saylor with Strategy either issues common equity, MSTR equity, or, you know, makes money out of- Stretch, S T R C, and then uses that to buy Bitcoin, and that's considered BTC yield from their perspective. What are you talking about when we're talking about Lightning Network, you know, yield?" }, { "speaker": "chris_ritter", "time": "07:32", "start": 452.04, "text": "No, perfect, Stephan. And I think this is part of the confusion is people are using the same term to define different things. And I, I hit this off pretty early in the report saying how Strategy defines BTC yield, they themselves say it doesn't match to fi-financial yield. And so in the report, I lay out exactly what the FDIC I see labels yield, and then we map it to native yield, and this actually builds off of Batia's work as well, but how I'm looking at the native yield, it basically boils down to your ROIC equals your effective fee rate that you're charging over the Lightning times the capital velocity, how many times are you turning over that capital on your Lightning node, and that actually breaks down then into what is our yield, and what the report formalized with the framework is Lightning routing income LRI, and, and that actually built directly off Bob Tia's equation that he, proposed probably a, a few years after your, podcast appearance, it was somewhere, late teens, early twenties that he kind of formalized that. We made it a little bit cleaner in that basically accounting for on-chain fee costs and rebalancing costs, which for most nodes are the majority of the costs, and this kind of comes to what the report laid out is that the operations of your lightning node is what's gonna determine how profitable you are, and if we go kind of Tag Reckless Days, I think that's still kind of the sense people have of Lightning is, oh man, you know, I opened up a Lightning node and all of a sudden I'm drained with fees, I'm not able to rebalance, and that was great in the experimental phase, but Lightning has moved far beyond that. It's professionalizing much more in a similar vein that Bitcoin mining went through professionally, where you have much bigger companies in operations. That's not to say that plebs can't run either mining or Lightning nodes, but I'm saying is that there's a much more greater adoption national standpoint of view and turning this into an actual business as opposed to a hobby." }, { "speaker": "stephan", "time": "09:26", "start": 565.87, "text": "On a lightning routing perspective, in the early days, it was seen more like a, a hobby kind of thing, right? It was seen as, you know, because the, the common understanding at that time was like, \"Oh, hey, run your, your Ombral or your Mineo or some, or Raspiblitz or something like this and just kind of manually open channels to people, and people would just kind of say, \"Hey, I'm doing a lightning store, can someone, here's my Right? That's kind of like in the early days of Lightning before things had professionalized, and then over time, there was a maturation process where then actually some nodes started to say, \"No, I'm actually not gonna open channels to you because I need them to be above a certain size. I need, you know, because a channel isn't a channel, right? It matters where it's pointed and how much actual turnover you're getting through that. So do you wanna just elaborate a little bit on the maturation in that space, the professionalization of running Lightning nodes?" }, { "speaker": "chris_ritter", "time": "10:19", "start": 618.57, "text": "Yeah, Stephan That, that is absolutely how Lightning started, and without those plebs running the nodes, Lightning doesn't get to where it is today. So I, I don't wanna make sure it doesn't come across as like I'm discounting all of that stuff, but I think the operation standpoint of, you know, probing throughout the network to understand what's the fee rates, where's the flow of capital, I think that, those toolings and making sure you're staying on the cutting edge of what tooling is available and actually putting BTC to work in probing operations and other things, I think that's what goes A lot of people said is that if you're talking about professionalization of routing nodes, that means you're actually locking up some of your capital to do these operations to then make sure you're running an efficient lightning node and understanding where the flows of capital are. I was even surprised myself as I was digging into more of how we run our node, Olympus by Zeus internally, and the numbers really shocked me as I started to lay it out in the report. And so that's where I really thought, well, if this is surprising me and I'm this close to it, how many other people aren't aware? Of how Lightning operates, and that gets to one of the, the original contributions there in the report, Stefan, we can maybe dive into is this stat-- static capital bias and, This was really in, in front of me as we were talking to people that have been experimenting with Lightning Network, researching it since, you know, the twenties and, and when it first came out in even twenty twenties, they didn't understand this concept. And so again, as I'm going through it and talking to different people as it relates to Zeus, these things really just kind of surfaced to me, and I felt, as I was more an investigator, just collaborating and, and bringing these things together and then formalizing it in the report." }, { "speaker": "stephan", "time": "11:57", "start": 716.79, "text": "Now, might also be a point that, look, in the wasn't as much volume simply. Now what we're starting to see as-- and you refer to it in the report also, I think River have d-- been doing like a yearly thing where they go out, they survey a bunch of large Lightning node operators, and then they kind of extrapolate based on that, \"Oh, what's the approximate volume?\" So I think in your report you, you cite that number here. River estimates Lightning processed one point one seven billion in November twenty twenty-five, driven primarily by exchange-to-exchange flows rather than retail micropayments. Volume grew two hundred Hundred and sixty-six percent year on year. Now, as we speak, it's June twenty twenty-six. So can you just comment a little bit on the growth in the payments volume and turnover in Bitcoin's Lightning Network?" }, { "speaker": "chris_ritter", "time": "12:43", "start": 763.06, "text": "Yeah, and, and shout out to River, Stephan. Without River, I don't know if we know anything about Lightning success. They are pretty much the pioneer in terms of knocking on the big nodes and saying, \"Hey, what data can you share with us? Let's then share it.\" So kudos to River. We need more companies like that, and I would like to Professional operators, a-advertising at least a little bit, this is what we're doing because this is how we start to understand how to utilize the network. I'm all about using Bitcoin as a payment method, but you going down to your local shop and, and paying for a coffee, this isn't moving the Lightning Network forward on any large scale. It's really going to be from the institutions that are gonna increase the volume, and that's what River is clearly showing, that it's exchanges and other big institutions. And so this ties into why I think it's important for Bitcoin. Treasury companies, if you're thinking about the long term health of the Bitcoin network, I think that means you're mapping to its properties, how are we using it and leveraging those properties? And part of that would be deploying some of it to the Lightning Network to be able to use that capital, and at that way everybody benefits, the holders, the spenders, and the actual network itself. And I think if you look at what does the Lightning Network look like and what does Bitcoin look like if the Lightning Network ten x's from here? Right now it's, you know, five, six thousand BTC What looks like twenty thousand Bitcoin on the Lightning Network, what different things start to open up and possibilities? So I really tried to think about the biggest scope of expanding the Lightning Network and how everybody involved in the Bitcoin network would then benefit, and that's one of the beautiful things about Bitcoin, of how it works, is its rough consensus, and so a lot of people are gonna go about it through different ways, but at the end of the day, if you hold Bitcoin on the balance sheet, I think you wanna put it to work on some level, and you don't just wanna hope and pray for price appreciation to turn that to your shareholders. And especially as public companies, I think a lot of them were surprised, \"Oh, we need quarterly updates, we need to actually show progress.\" And Bitcoin cycles still, we're, we're seeing it play out, right? It's only every four years you're really gonna have great news, and the rest in between, it's gonna be kind of rough and choppy. So being able to actually have an operation that you can say, \"We're putting Bitcoin to work,\" \"Here are the actual numbers,\" \"Here's our return,\" I think that's important for" }, { "speaker": "stephan", "time": "14:57", "start": 897.46, "text": "The other interesting concept that most people won't, it's not intuitive if you're not a professional or not really deeply in, into this industry, is just the sheer amount of turnover that's happening, right? Because people will look at, \"Oh, it's five thousand or six thousand BTC locked into the Lightning Network channels,\" but actually, I, I think off the top of my head, I remember from that River report or chatting with Sam Wouters from River, it's like turning over like three times, you know, like a month kind of thing. Like that's, it's something like Have you found?" }, { "speaker": "chris_ritter", "time": "15:28", "start": 928.34, "text": "No, and Stephan, it goes back to the static capital bias that we named. This is the number one error in analysis that feels like it, it diverts understanding the Lightning Network. So let's dig into this. So basically, at Olympus, run by Zeus, we have ten BTC on that node approximately. You can go to mempool dot space, look that up, and you can look up most nodes and, and find them pretty easily on mempool dot space. And a lot of people will be able to look at that and say, \"Oh, okay, well, Published fee rates on that, and then people make, calculations. You're missing over half of the picture there. So when I dug into Olympus, out of the ten BTC that's on the node, only one point o nine, Stefan, is actually dedicated to routing. So only ten percent were actually dedicated around. The rest is to LSP and other operations that I talked about. But of that one BTC, we've turned that over sixty-five x in a year. And so that's the kind of- That, that turnover is insane when you look at it from a financial perspective, and then if you even try to make it more of a one-to-one comparison to, traditional financial metrics, Olympus would be turning over seven times annually, which actually matches what River showed as well through a different analysis. They showed that it was seven to one turnover on an annual basis. So these numbers are just not what TradFi understands when they think about yield, especially from a loan. Banks, on the other hand, need to leverage ten x because their turnover is So much lower, and so with Lightning, you get basically the same turnover, but at zero leverage. And again, when we're talking about risk profile, I think this should kind of set off an idea in CFOs and other CEOs' heads that are looking at Bitcoin on their balance sheet and what do we want to accept as a risk and what's the return? And I think these are just conversations I'm seeing anywhere, and if they are, please bring me in, I would love to talk more about that and keep pushing that forward." }, { "speaker": "stephan", "time": "17:23", "start": 1043.24, "text": "So as I'm reading you, it's like Because there's so, there's such high velocity in terms of Lightning and it's growing, as we mentioned, the volume, even off smaller initial capital amounts, people can still, they can turn it over many more times. Now, I guess the only, probably, what, the probably the big question, and I've asked this also when I was chatting, with, you know, Bitcoin treasury companies who are doing this kind of thing I guess there is the question of if you were to just, you know, add a lot of Bitcoin to the Lightning Network over time, that yield percentage might come down over time. Right? Absolutely. So, you know, so that like when people are reporting the number of ten percent or fifteen percent Lightning yield, you know, maybe that's just because now it's early and there's still like a lot of this volume to go. If you were to like really- Over-saturate the network with BTC in the Lightning channels, then maybe the yield percentage would have to come down because now you're, you know, like put it this way, you-- some of those yield numbers might be picking the low-hanging fruit, and then as you go up, you're going higher and up the tree, you're getting less yield." }, { "speaker": "chris_ritter", "time": "18:33", "start": 1113.05, "text": "Stefan, great point, and I don't think we're even close to understanding where the top of this is and where it starts to turn. Internally at Zeus, we're running zero percent optimization on a lot of the routing operations. We've been so focused on the LSP and the consumer wallet that we haven't even started to build optimization. We're actually just at the beginning of it, and it is incredible some of the tooling that we are gonna have coming out of the pipeline to help increase routing efficiency. So to your point In, in, in the big picture, of course, it's going to start to compress at some time, but I don't think we're anywhere close to that. I, I liken it to the, the same way Saylor pioneered digital credit and his approach, I wanna see more pioneers do that on Lightning, and let's actually see where it starts to turn. Think about it, there, Bitfinex has twelve hundred Bitcoin on the Lightning network deployed right now, and then if you go down, you know, block is probably in the five hundreds the last time I checked, so the numbers here are Compared to the greater network. And so to your point, yes, I, I think at some point it will compress, but we're nowhere close to that, and I want more people out there testing it and actually publishing some data so that we can all see, all right, where does it start to turn? But the same point, Stefan, as it compresses, you're gonna have to buy your way into positions on the network. So now is the actual point to establish positions on the network because then you're able to actually have it for the long haul and not have to buy in, and then More diluted in terms of your yield return per capital deployed." }, { "speaker": "stephan", "time": "20:07", "start": 1206.74, "text": "And in terms of, as you mentioned the point around your position in the network, right? Or people in Lightning might mention this centrality idea, like People look at what are the more connected nodes on the network. So as an example, Asyn, the creators of Phoenix Wallet, Kraken, Wallet of Satoshi, Coingate, OneML, like these are some of the large ones. Obviously, you guys over at Zeus with Olympus, Block, obviously, LQWD because they are also doing this kind of thing. So then, I guess the other element is, do you have a business that- Benefits or relies on that, right? Because if you're running a lightning service, obviously, you will be in a position where you're in, you're, you're, you are well placed to actually clip some fees on the way, because maybe you're running an LSP or a wallet or an exchange where there's lots of volume passing through, right?" }, { "speaker": "chris_ritter", "time": "21:02", "start": 1262.12, "text": "Stephan, Stephan, I love how you're thinking about this, and I think about that as almost a level two for the native yield framework. So framework, level one for the native- The yield framework would be just deploy and just try to get some return on the Bitcoin and, and Zeus, we showed in the report that the trailing fifteen months, we have consistently gotten between five and six percent, even as fees have over halved, but velocity has gone up triple that in o-over that time. So that's just level one, starting that. Level two would be starting to build products and services that utilize Lightning in some way, and this gets back to Block and why they're able to get that- Kind of return is because obviously they have products and services built around Lightning, and so they are able to get some fees, and you are able to adjust those fees as well, especially if your users are a little bit more in your ecosystem. And so that's, that's where this framework is so young that you're just talking level two, and there's really only one company that is prominent that we can talk about that's actually doing this playbook. This is how early this framework is and actually being adopted. So I wanna see a lot more companies experiment with this and see And again, you look at the positive reinforcement effects. If you're actually using Lightning in your business, you're helping adoption, and I think a lot of people that are gonna be new to Bitcoin over the next years, Lightning is gonna be their first rail in some form or fashion, whether it's, it's in front of them, you know, and they clearly understand it's Lightning, or it's more in the background, that's gonna be up to the different companies and how they build. But yeah, what you're talking about is building upon that level one of native yield and really being able to juice" }, { "speaker": "stephan", "time": "22:42", "start": 1361.98, "text": "The other interesting one, and I saw this in your report also, because this was kind of an argument in the early days of Lightning as well, because many of us, let's say, small blockers would be arguing with B-cashers, and one of the talking points was, \"Oh, hey, Lightning Network is gonna be a hub and spoke, it's gonna centralize.\" And I think begrudgingly, there's probably some truth to that, at least some truth to that, I'll say, like it's, it's not, you know, you still can set up your own Lightning node, but it's fair to say, and you, you, I'm quoting from your report here, \"The Lightning network is centralizing. The data is unambiguous. Research finds that ten percent of nodes hold eighty percent of network capacity, and the top fifty percent hold ninety-nine percent. The Gini coefficient for node strength measured zero point eight eight in twenty twenty, and by twenty so hub formation is a structural consequence of Lightning's design. So can you just explain and elaborate a bit on that?" }, { "speaker": "chris_ritter", "time": "23:35", "start": 1414.96, "text": "Yes, Stefan, I think we need to, to again focus on this head on and accept, yes, Lightning is centralizing, but that's not the canary you need to be looking at. It's, do you still have unilateral exit rights on the network and can your transactions be censored? The answer is no to both of those, so therefore, Lightning is still protecting all the properties that make Bitcoin Valuable. And so, yes, I, I understand where you could just automatically map, oh, centralization is bad, so therefore, if Lightning is centralizing, that's bad. That's actually showing that it's professionalizing. And it goes back to what we talked about earlier, if you want more capital deployed onto the network, it's gonna be through professional operations, because they don't wanna lose money. They're not gonna be a charity and, and let's just put capital on the Lightning Network to let it vanish. And so, yes, it is centralizing, but all-- everything about" }, { "speaker": "chris_ritter", "time": "24:29", "start": 1468.58, "text": "Lightning through unilateral exit and also through, you can send your payments still to whoever you want and they can't be censored because of how Lightning is architecture." }, { "speaker": "stephan", "time": "24:38", "start": 1477.86, "text": "Yeah, and just to, I guess, explain that a little bit. At least my understanding of Lightning today is your Lightning node has a view of the network, it has like a network graph, and it calculates its own routes, and it can sort of go, \"I'm gonna route this way, \" and if it doesn't work, \"I'm gonna retry another route, I'm gonna route through this, this, and that nodes A, EFG or whatever. So the, that's kind of the nature of the Lightning Network, and so that's an interesting component of it. And what we're also seeing is this concept of like other L2s are kind of using Lightning as their, as their rail, like as their kind of last mile also, and so it's kind of- Starting to reach a point where a lot of wallets are starting to have a Lightning address, and it's kind of assumed, okay, I can just make a payment to, whatever, Chris at Zeus or whatever, and so that is kind of also showing this network effect of Lightning is growing, and in a way, to be fair, different to what many of us would have thought, right? Because many of us would have thought, \"Oh, it's like you gotta have like your Umbral and your MyNode or your Raspiblitz back at home and your, you know, Lightning conference in, Berlin, approximately October 2019, I had Zeus wallet and it was connected back to, like, my L, like, my LND on my Lightning node back at home in Sydney at that time, and, I was using Zeus to make that payment, and it was like, it was over Tor, so it was kinda slow, and, you know, I, I wasn't, I wasn't, the most professional, but anyway, I still got the payment done, and, but that's kind of, that's do you wanna just elaborate a little bit on the safety part? Because I think that's also interesting for people, because obviously it's not the same thing as keeping your SATs on your cold card offline. There is a security consideration with Lightning routing being an LSP or doing this kind of service. Can you elaborate on, you know, methods of keeping it secure? Is it things like VLS? Is it things like what the Ascent guys are doing? Is it, you know, what are some of the ways that the professionals are keeping their- keys online but still secure." }, { "speaker": "chris_ritter", "time": "26:53", "start": 1612.56, "text": "Yeah, Ste- Stephan, going back to your point though, and that, the part about the Lightning Network that is still holding true to the early days is you can still-- the bar to enter is very low. And I cite Chris Decker in the report talking about, \"That is the key thing we need to make sure stays in the Lightning Network, that the bar is still low for entry for a pleb who just wants to be able to connect.\" Now with Zeus, you can actually run two nodes in your phone on different implementations. You can run an LDK" }, { "speaker": "chris_ritter", "time": "27:20", "start": 1640.44, "text": "The so many options, whether you have a hardware at home or you wanna go on the go. To the security point, you basically need to think about this as, as a cybersecurity operation. And Evan has an extremely high background in terms of cybersecurity, and so I can't think of a better person I would wanna build with on the Lightning Network where security is always top of mind of how we're architecturing things at Zeus and looking at the Lightning Network as a whole. So again, this comes back to, if you're gonna do this professionally, you need to make sure security is number one And number two, in how you're thinking about it, because it is on a hot wallet, it's not in cold storage, and so there is an elevated risk profile. But with VLS that you mentioned, that's what I'm most excited about, and I, I can't think of a more exciting project in the space right now for the potential and what VLS allows with Lightning is basically a third custody model, Stefan, that we haven't had before. Previously, you had the principal-agent problem where essentially you had to give up custody for someone else to manage your funds or You take on sole custody and you're managing as well. What VLS, when they get to one point o, is gonna unlock is all these controls and permissions so that someone like Zeus could run the operations of your node but never have access to the keys. So at any point, Stefan, that other party could say, \"I'm just gonna eject from the Lightning Network, I'm done with this.\" They could unilaterally close down the node without the operators who is running the managing operating permissions and be able to get the Bitcoin back to the address that they have. Had when they originally set up. I think that's revolutionary to basically to be able to hand off the responsibilities of operations, which is the delta between actual returns on the Lightning Network or getting drained and losing sats and actually having a negative sat flow there. And so VLS, that's where I'm looking at, and I'm really excited for the progress that they've made. I know it's been a long haul, it's been around for a while, but we are right there where it's being fully fleshed out, enterprise ready, and I think that is, the essential part Moving forward on the native yield framework." }, { "speaker": "stephan", "time": "29:23", "start": 1762.9, "text": "On the Olympus side of the house for you guys, 'cause obviously there's Zeus, the wallet, the app. are you-- Like, what services are you guys offering as Olympus? Like, are you offering like LSP services or like-- put your Bitcoin with us and we'll help, we'll partner to do yield or lightning routing. What, what are the services you're offering on the Olympus side of the house?" }, { "speaker": "chris_ritter", "time": "29:46", "start": 1786.09, "text": "Yeah, Stephan, great point. So, Zeus White is the umbrella for all the B2B services that Zeus has. We're always gonna have the wallet, as Evan said multiple times, it's always gonna be open source, no KYC, we're gonna hold to those standards. On the B2B side, we're gonna continue to make sure we, we never have custody of funds, Stephan. We're And that's why these developments have been so exciting, because now with this third custody model of managed operations, but the, but the customer still holds the keys and, and all of that stays with them, we're able to manage a lightning node and help a treasure company or anybody else that has Bitcoin that they wanna deploy to the lightning network and earn native yield, Zeus can now come in and manage those operations, and our performance speaks for itself in the report in terms of we're getting five to six percent off our own one Bitcoin and being able to route through that. And so I think that's exciting because we can still hold the principles that built the brand and the wallet of not custing, no KYC, and we can now help that with businesses by not taking control of the keys, but managing the operations that we've built expertise. And so that's really where our focus is now, and where, like I said, we're building out a lot of amazing tooling that's gonna help us even optimize our results. 'Cause again, Stephan, this is from zero optimization, and that's what was even so shocking to me That we really haven't even focused on this, and so that's the big focus, and then also helping just integrate Lightning with any, you know, banks, exchanges, anybody that needs Lightning, we were able to help an exchange in India int-integrate Lightning in two days, and they're up and running, and so that's how quick we can do it, and if we're looking at adoption, we want it to be that easy for institutions as well as PLEVs to be able to get on the Lightning network." }, { "speaker": "stephan", "time": "31:30", "start": 1890.2, "text": "Interesting. So as you said, five point six percent, and that's what I That's, just to be clear, that is annualized and in Bitcoin terms, yeah? Yes. So then, as an example, as, the ten Bitcoin, five point six, so theoretically in a year with ten BTC, you've earned point five six BTC just in the routing fees, and is that accounting for the like channel open and close fees and all those other things, or is that, like, basically, is that a net or a gross figure?" }, { "speaker": "chris_ritter", "time": "32:02", "start": 1922.16, "text": "Yeah. So the gross figure, if we look at the, the tw- trailing twelve months was five point five eight percent. I'm, I'm actually reading off the report here, Stefan, I don't have these numbers memorized actually, but, and then the net was four point six. And again, that's with zero optimization on our side, so I look for both of those numbers to increase as we're actually optimizing" }, { "speaker": "stephan", "time": "32:20", "start": 1939.99, "text": "around that. Have you had interest from just like capital providers, like people who are like, \"Hey, I don't even have a business, but can I just come and put Bitcoin with you and earn yield that way, or we, we share on the yield? \" Have you had people like" }, { "speaker": "chris_ritter", "time": "32:38", "start": 1957.82, "text": "it has been pretty interesting, the people that have been reaching out to us and saying, \"Wow, I didn't even know this was possible.\" And so that's where, again, I kind of ended the report saying, \"I don't wanna be the only one talking about this. There are other people out there on the Lightning Network that are getting similar results probably, that aren't talking about it. Kudos to River for actually promoting all of this. I wanna see more of this because I think this is one of the best ways to put your Bitcoin to work because of all the properties that it Property filter, I think that's one of the biggest things in the report that I was able to dig into and tying the, the store of value with the medium exchange and how it actually builds on top of each other, and that it's not a binary decision here, that store of value is really the prerequisite, and now medium exchange can happen, and because all the filter, all the properties that make Bitcoin valuable are held in Lightning, I think that's a beautiful thing, and if you are a Bitcoiner and, and you came here, you know, through your podcast, especially Stephan- I think this is something that should resonate with you, and you should think, \"All right, how can I be involved in this?\" Or at least have it on top of mind if I run into other people that are having Bitcoin on the balance sheet and trying to put it to work." }, { "speaker": "stephan", "time": "33:48", "start": 2028.23, "text": "Yeah, and I, like, I've been commenting about this recently as well, that I think even this so-called debate be-be tween, so-called, MOE and SOV, like, it's a fake fight. Like, it's really, it's actually fake. It's honestly- It's like, yes, people argue about it online, but, i-- you know, in the real world, in practice, it's, you know, people aren't actually seriously fighting and arguing about that. Like, it's just not a thing. Now, I, you know, I think you could say it's descriptively true that the SOV phase will kind of happen more so before the MOE phase. I think that is true. But nevertheless, I'm still happy to earn and spend Bitcoin. Most Bitcoin people I know, even Safteen has- has, you know, Lightning payments on his website, right? So it's not that he or other people are like actually against using it as MOE. Maybe there's Dan Held, okay? I'll give you Dan Held. He's one of the ones who has been actually like saying, \"No, merchant adoption isn't the thing,\" and, fine, but that's like one person out of basically anyone else in kind of Bitcoin ecosystem land who has kind of spoken against, let's say, the MOE use. Whereas in practice, remember, there are people who want to earn Bitcoin too, You had to like directly earn it, or you had to buy it, or you had to mine it. I mean, that's-- you can either buy Bitcoin, you can mine it, or you can earn it. I mean, that's, that's how else are you gonna get it, right? So The, these are, so to me it's a fake fight, you know? I just think it's this kind of, you know, people sometimes, talk online just for, you know, now, there's kind of different nuances to it of like the capital gains tax thing and the different aspects of like what was tried and what will work and what should you build a business on versus what is, you know, going to be easier to build a business on right now, right? but yeah, as I said, I, I think- For the most part, it's a fake fight, at least is how I see it. So, the other, actually, speaking of payments, I mean, the super hot thing nowadays, AI, right? Like everyone's talking about it. I mean, rightly so, it's a big thing, everyone's using it, I'm using it, I'm sure you're using it, everyone's using it. There's been a lot of talk about agentic payments. Now, some of that has come from, let's say, shitcoinland or stablecoins, where they're kind of like, \"Oh, my base and my USDC and whatever.\" What about in Lightning? Are you hearing or seeing much of agentic payments in Lightning?" }, { "speaker": "chris_ritter", "time": "36:12", "start": 2172.1, "text": "I'm hearing about talks, Stefan, but I, I haven't seen any hard data. And, and like I said, the report's been out for five or six weeks, and I was pretty in deep research throughout, right up until the end of publishing it. And I, I didn't see anything significant enough to have, you know, even a paragraph's worth in the report. I think the potential could be huge, but at this point, it's potential to me, and it's exciting that Lightning could be right there to catch a wave, but I didn't see a lot company or, or this individual has really been able to show the data. And again, this comes back to Lightning in general has a data problem in that so much of it is obfuscated with the private channels that at best you're gonna get a fifty percent view of the network, and usually it's even less than that. So I think those pa-problems actually compound, and it'll be even longer until we see, I think, a lot of hard data on the agentic side. But I do think all the architecture is set up for it, and the potential is there. I just haven't seen seen anything substantial. So maybe" }, { "speaker": "stephan", "time": "37:13", "start": 2232.8, "text": "it's, it's more of a narrative than fact or reality for now, at least the agentic payments aspect of it. But the other interesting part is just AI to implement Lightning, right? Like we're starting to see more of that, like people can just like take an SDK that exists out there and like vibe code Lightning support, you know, very quickly, right? Like I just did it the other day with like Breeze SDK just to play around, right? So that's maybe another element that people are now, you know, obviously there's There's SDK, there's, I think LDK, and there's, I'm sure there are other, there's, Phoenix D. So I guess, are you seeing on the Zeus and Olympus side of things, is there anything that people can use to sort of vibe code, a, you know, Lightning support or, you know, AI code like with, I don't know, MCP or Skills File or whatever? Like, is there something you're doing on that side?" }, { "speaker": "chris_ritter", "time": "38:04", "start": 2283.75, "text": "we haven't, we haven't focused on that stuff, but I think Money Dev Kit probably comes" }, { "speaker": "chris_ritter", "time": "38:13", "start": 2292.66, "text": "Been long time. And they're another" }, { "speaker": "stephan", "time": "38:13", "start": 2293.42, "text": "example, yeah." }, { "speaker": "chris_ritter", "time": "38:14", "start": 2294.26, "text": "Bitcoin designer is, is helping with that project and, and I think that is-- But, but going back to the actual use, actually there is one instance of, Jana, Lightning payments. I was talking to Freddy New of Bhatel, and he talks about that they apparently do a weekly or some kind of reoccurring, contest on X where they'll say, \"All right, hey, post a, an invoice or whatever,\" and they're having their a- agent pay the invoice, and sometimes The different Lightning protocols is getting surfaced, and the more we can smooth out those edges, that's yet another thing that's holding back adoption on some level. You think how, if it could be easy for a business to say, \"Hey, have a customer ser-service, we can tip you back with a zap,\" or if it was helped by-- I think there's so many things that are low-hanging fruit that people think initially isn't gonna move the needle, but if people just start getting used to interacting with zaps on some level with a business, I think this is- How you start to get more adoption and where Lightning can really be a leader in that. But again, that goes back to making sure the whole architecture is starting to be smoothed out, things like V-VLS one point zero are fully online. So I think we're right at the precipice. I think Lightning is really at the center of where Bitcoin is moving, and I'm just really excited about what I was able to unearth in the report, and, it really just got me fired up for the potential there." }, { "speaker": "stephan", "time": "39:34", "start": 2374.28, "text": "Excellent. Now, on the consumer, you know, on the app side, like on Zeus Wallet, can you give us any updates there? I saw recently, you know, there's been this kind of idea of a graduated wallet, and I believe you have, eCash, right? Like you have automated eCash that automatically selects a mint in the background, and then you quote-unquote graduate up to self-custody Lightning. Tell us a little bit about that side of things." }, { "speaker": "chris_ritter", "time": "39:58", "start": 2397.69, "text": "Yeah, and that's what the team's been hard at work with. Evan's been leading Really the focus from day one is making sure we get the consumer wallet to, all right, this is actually ready that you could be the first recommendation to your friend to start with Bitcoin, and we think that the easiest way to onboard is through eCash, and we're also taking the point of, yes, it is custodial, but we're upfront about the trade-offs of that every step of the way, and that's where we think the Sherpa part comes in, where we're letting you know, hey, this is custodial, at any point you can move it either on-chain or open it channel and actually take custody of your funds. And this goes back to some of the stuff we touched on earlier, Stefan, is Bitcoin is getting so big, there are so many different people at different journeys, different amounts, different use cases, and it's gonna be a rough consensus in how Bitcoin is used. And so we take the approach of, we want as many options to help you get onboarded, but the same point, we're gonna be upfront with you of what you're taking on, and we're even utilizing like Noster for Web of Trust to be able to understand what mints maybe are best Better to have your funds with. And so there, there's a lot of tooling that we've worked with the wallet to make it much better. If you've used this in the past and you haven't been using it lately, I encourage you to check it out, the latest version thirteen point o. That is a much improved experience. Like I said, you could be running two different Lightning implementations, node on your phone on the go, in addition to a hardware wallet. So I'm not sure if a more powerful wallet at the same time beginner friendly that you could be recommending to your friends to get onboard" }, { "speaker": "stephan", "time": "41:34", "start": 2493.98, "text": "Listeners so they can, find out more for themselves. I will include the links in the show notes, but it's zeusln dot com, the Lightning Economics Report from April twenty twenty-six. That's the main thing we've been, speaking of, and Chris, thanks for joining us today." }, { "speaker": "chris_ritter", "time": "41:48", "start": 2508.47, "text": "Stephan, thanks so much. It's a pleasure." } ] }