Can You Actually Earn on Lightning? With Chris Ritter | SLP739

**Stephan Livera** (0:00)
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 are not 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 going to be talking a bit about Lightning Economics and yield on the Lightning Network. And now, maybe long-time listeners, you'll know there have been people talking about this idea for years and years and years. I think one of the first few episodes back in episode 7 or something of my podcast, I had Nick Bartier on, this is back in 2018 So this conversation has been ongoing. But Chris is joining us, Chris recently wrote this piece called Lightning Economics. It's a report for Zeus.
And I thought there was some interesting stats and things to pull out from it. So first off, Chris, welcome to the show.

**Chris Ritter** (1:05)
Stephan, thanks for having me. And yeah, your podcasts were one of the first in my Rolodex of podcasts. So it's kind of surreal to be on it. So I appreciate it. And yeah, going back to Bartier, I remember listening to that episode. So it's interesting how it all comes full circle sometimes.

**Stephan Livera** (1:18)
It's all full circle. Yeah. And you never know who's listening, as I often say nowadays.
So look, let's just start, I guess, let me set a little bit of the context for people, at least 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. So I think maybe two years ago, one or two years ago, Miles from Cash App, 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 some volume here in Lightning. And so that was kind of interesting for people. And then now Zeus is 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 us a little bit about why you went and made this report.

**Chris Ritter** (2:21)
Yeah, Stephan, there's a lot to unpack there, so feel free to cut me off, 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 120 public companies, 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. And I think when I was first 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 there's not a lot of even structured frameworks that people are thinking through. They're just kind of following the leader. And obviously we know the biggest and loudest voice in the last years has been Sailor with Strategy. And I felt that there was a trap that the companies were automatically falling into thinking this is the only way to go about Bitcoin. And I want to make it clear 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, Stephan, we have three buckets right now. It's digital credit, derivatives, and native yield. And those three frameworks, I think, are the frameworks to look at treasury companies and how they're applying Bitcoin. And 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 wouldn't be possible to have this conversation in 2022 or much prior. And so I think as things are developing, sometimes if you're just head down, and I get it, 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.