Returning trust to Bitcoin trading: Meet LN Markets

In conversation 22.03.2024

Returning trust to Bitcoin trading: Meet LN Markets

Romain Rouphael admits that when he first encountered Bitcoin, he found the idea “ludicrous”. Fast forward ten years and he is Co-Founder and Co-CEO of LN Markets, the first instant settlement trading platform built on the Lightning Network and has just announced a $3m funding round – of which Timechain was a part. We caught up with Rouphael about his bitcoin awakening, LN Markets’ recent “hyper-growth” and the technology behind the team’s new platform for institutional investors. 


How did you and your co-founders become entrepreneurs and innovators in the Bitcoin space? 

I started my career in financial markets and met my co-founder, Côme Jean Jarry while we were both working in Hong Kong. We were interested in bitcoin, but at that point, didn’t understand its purpose, and, honestly, thought the story behind it seemed ludicrous. But when we started trading, we realised the power of it; that you can send money all over the world and it will arrive within ten minutes to one hour, with no barriers. Compared to the plumbing of the traditional financial markets, we immediately saw the potential.  

So, when we both came back to France in 2016, we decided to go full-time into Bitcoin, and, along with our other co-founder and CTO, Victor Afanassieff, initially set up a Bitcoin consulting firm for financial institutions. That developed our understanding of the power of the protocol, and when the Lightning Network emerged in 2019, enabling instant transfers, we knew that it was a game-changer for trading. Our goal soon became to build a new kind of financial infrastructure and financial services on its foundations. 


LN Markets has revolutionised how people can trade Bitcoin. What makes it different?

LN Markets (from Lightning Network Markets) is the first platform of its kind for derivatives, enabling users to trade options and futures on the price of BTC to the USD. It’s a game changer because funds are instantly moved to the exchange and back to your wallet, so trading and custody are kept separate, dramatically reducing the risk of loss or mismanagement, as happened with FTX and other crypto exchanges. 

The other big novelty is that users can instantly set up an account by scanning a QR code to be authenticated, after which they can immediately move funds to the platform and receive funds back to their wallet. 

We launched in 2020, right at the start of Covid, and we’ve gradually improved the platform and built our user base. Crypto scandals such as FTX have helped to prove the value of what we’re building and since 2023, we have seen almost hyper-growth with monthly trading volume now at around half a billion US dollars. 


We’ve heard about DLC Markets, your new platform targeted at financial institutions – tell us a bit more about that.

Whereas LN Markets is aimed at retail traders, DLC Markets is designed for institutional investors, giving them the same advantages of a non-custodial, trustless trading platform. 

DLC Markets is based around Discreet Log Contracts (DLC), a protocol created by Thaddeus Dryja, the co-creator of the Lightning Network, as a way of executing smart contracts on the Bitcoin protocol.  With DLC, institutions can define, customise, and fine-tune their trading contract based on an oracle, which is a price feed. Bitcoin becomes like a clearing house for the contract’s life, ensuring that all the cash flows are managed according to its terms. 

As with LN Markets, DLC Markets cuts out the need for an exchange and massively reduces the risk of institutional investors trading bitcoin derivatives bilaterally over the counter (OTC). 


Why have you built on Bitcoin?

Bitcoin as an asset is probably the best collateral in the world; it’s rare, it’s scarce, everyone can verify issuance and transactions, it’s auditable, and it’s not controlled by a single entity or government. As an infrastructure, it is also extremely robust, which makes it ideal for building a new way to provide financial services. Plus, as a company, we are very aligned with the ethos of the Bitcoin community, which is about building for the long term and building to last. This is what we’ve done with LN markets and what we’re aiming to do with DLC Markets. Our growth and resilience so far are a testament to this philosophy. 


You’ve recently completed a funding round – how will this accelerate your growth? 

So far, we’ve been very lean; just six people since we started. Now that we have more volume and activity, plus launching new products, it makes sense to expand the team, particularly by bringing in senior individuals with institutional experience to help us grow DLC Markets. 

Another huge benefit of the fundraise is gaining the support and mentorship of our investors, who bring extensive experience and expertise in growing successful fintech and bitcoin businesses. Our investors share our vision, and their mentorship is an important step for the future.


What is your product roadmap for the future?

User experience has always been a huge focus for LN markets, and we’re planning a revamp of the trading interface to create an innovative, simple, best-in-class experience. A big part of this is enhancing the way users can interact, and we are working on a new feature, currently known as ‘the replicator’, which will enable users to replicate the strategies of the top ten traders. 

As DLC Markets is a new product, the roadmap is very long. We have a minimal viable product (MVP), so we’re working on launching a main net platform, and over time we want to add more products. 


Do you think Bitcoin and the Lightning Network replace the traditional financial system? 

It’s a tough question and ultimately, I don’t know. What I do know is that even today, it offers a real alternative for people to save or spend money in a different system that isn’t controlled by a single entity. It’s exactly what Satoshi wanted to build and 15 years later, it is crazy to observe it working so smoothly and reflect on where it originated. 

What has surprised us with LN markets is the feedback from users from around the world about how it has impacted their lives because of life-changing gains, or how they use it to convert currency to USD or to save money. We didn’t envisage that when we launched. 

Bitcoin is getting bigger and bigger year after year, but ultimately, it’s still very early. That’s what I find so exciting – it’s just the beginning.


Visit LN Markets and DLC Markets for more information