In light of the recent turmoil in the DeFi space, I wanted to discuss an angle on Bitcoin and Lightning Network adoption that many in the community may not have considered – I believe that LN is positioned to become the future of DeFi 'yield farming' for BTC hodlers.
Yield farming by definition is any effort to put 'Crypto' (Bitcoin – not Crypto) assets to work to generate returns on said assets.
However, as Bitcoin's value as pristine collateral increases. The risk of lending it out to 3rd parties who rehypothecate via risky fractional reserve lending tactics – inflating and manipulating the market by selling paper bitcoin whilst absorbing real world bitcoin demand, will become too great.
Something else to consider is that even if you are a complete Bitcoin Maxi – offering up your BTC to a DeFi platform who dabbles in shit-coinery exposes you to far greater counterparty risk; relative to the quality & stability of the other shit-coin 'networks' these DeFi platforms offer financial instruments against.
Although it may not be economically viable just yet. The Lightning Network currently offers the only method to lock up BTC (by providing liquidity when opening channels) with the ability to earn real BTC yields via transaction fee's, without any counterparty risk.
I honestly believe this will play a pivotal role in the adoption and expansion of the lightning network and in Bitcoins evolution from from store of value to a true medium of exchange.