A meld between Ethereum and the Lightning Network, the proposed second-layer scaling solution for the Bitcoin network, has arrived.

This week, blockchain gaming startup Blockade Games announced it had integrated Lightning Network payments into its ecosystem, such that users could use the second-layer network to make in-game payments in the company’s Neon District game.

Specifically, the idea is that these LN payments could thereafter “kick off a series of events on any other chain, such as minting a brand new Neon District asset to a buyer’s Ethereum or Loom Network wallet. ”

https://twitter.com/VitalikButerin/status/1157284223218343936

As Blockade Games explained in their announcement:

“We believe that Ethereum will be integral to the future of non-fungible assets and blockchain gaming. However, we also believe that Bitcoin is the future of money, and many of our players will prefer to hold most, if not all, of their funds in Bitcoin. We want to make it possible to serve our biggest supporters and players on the Bitcoin network while utilizing all of the infrastructure present on Ethereum and other blockchain networks.”

The startup said the possible use cases for this particular kind of meld was manifold, such as providing game respawns for the price of a handful of Satoshis:

“There are many more use cases that have yet to be explored. Among these, we’re looking at providing real-time micro-payments for game developers and content providers — so you can pay for additional lives for just a few Satoshis.”

Phonon Network Doesn’t Connect Useable by Both Bitcoin and Ethereum

Speaking of innovations pertinent to both Bitcoin and Ethereum, the recently proposed Phonon Network wouldn’t connect the two blockchains but is notably usable by either.

Built by the GridPlus team, the Phonon Network is a “hardware enforced off-chain payment system.”

However, the second-layer scaling system differs from other similar projects like LN and the Raiden Network because its payments — so-called “packets” — are transacted directly between participants with no third parties needed, e.g. routing hubs.

“The Phonon network has advantages in that it does not require capital lock-up, intermediaries, or participants to monitor the blockchain continuously,” GridPlus co-founder Karl Kreder said on the network’s announcement.

Technically, the system is blockchain agnostic but is being prepared for Bitcoin and Ethereum first. In being hardware driven, the network would rely on smart cards to make private off-chain transactions.

Such smart cards would transact in “phonons” that are mapped to cryptocurrency deposit addresses.

Amount of “Wrapped” Bitcoin in Ethereum’s DeFi Rising

Looking at the metric of bitcoin locked in the Lightning Network, it’s difficult to conclude with certainty how much BTC is in LN since private channels obscure the actual amount.

Even still, on the surface it appears that the amount of BTC locked in LN is steadily declining in recent weeks. Conversely, the amount of “Wrapped” bitcoin (WBTC) being tokenized on the Ethereum network seems to be uptrending.

According to decentralized finance tracker site DeFi Pulse, the amount of WBTC currently minted on Ethereum currently amounts to just shy of $6 million USD. That’s up considerably from the $1 million that was minted as of early May 2019.

Altogether, there are now 563 WBTC in existence at press time.

Interestingly, early Bitcoin stakeholder Charlie Shrem recently said he’d prefer to be able to open a MakerDAO collateralized debt position (CDP) with bitcoin instead of ether (ETH). Some quickly pointed out that a similar thrust might soon be possible through Multi-Collateral Dai (MCD).

Interesting- I could fund a $DAI and lend it at 10% with @Dharma_HQ to preserve the upside in ETH. However I’d rather to this with Bitcoin and not ETH. Thoughts ? — Charlie Shrem (@CharlieShrem) August 1, 2019

In other words, if WBTC is one day voted in by the Maker community, it would be possible to use WBTC as collateral in a CDP instead of ETH. However, it remains to be seen which altcoins will be voted into the MCD program.