Bitcoin L2 and BTCfi Complete Guide 2026: Lightning Network, Stacks, Liquid

// Creating a Lightning Network channel (simplified)
const lnd = require('@lnwallet/lnd');

async function openChannel(nodePubKey, localAmt, pushAmt) {
    // Connect to your LND node
    const wallet = await lnd.connect({
        host: 'localhost',
        port: 10009,
        certPath: '/path/to/tls.cert',
        macaroonPath: '/path/to/admin.macaroon'
    });
    
    // Open a channel with another node
    const channel = await wallet.openChannel({
        nodePubKey: nodePubKey,
        localFundingAmount: localAmt,   // Amount you're committing
        pushSat: pushAmt,                // Initial balance to remote
        satPerByte: 10,                  // Fee rate
        private: false                   // Public channel
    });
    
    console.log('Channel opened:', channel.channelPoint);
    return channel;
}

// Example usage
openChannel(
    '02abc123...',  // Remote node's public key
    '500000',       // 500,000 sats ($200+)
    '250000'        // Give remote 50% initial balance
);

// Sending a Lightning payment
async function sendLightningPayment(invoice, amount) {
    const wallet = await lnd.connect({
        host: 'localhost',
        port: 10009,
        certPath: '/path/to/tls.cert',
        macaroonPath: '/path/to/admin.macaroon'
    });
    
    // Decode the invoice first
    const decoded = await wallet.decodePaymentRequest({
        paymentRequest: invoice
    });
    
    console.log('Payment details:', {
        destination: decoded.destination,
        amount: decoded.numSatoshis,
        memo: decoded.description
    });
    
    // Send the payment
    const payment = await wallet.sendPayment({
        paymentRequest: invoice,
        feeLimit: { sat: 100 }  // Max 100 sats in fees
    });
    
    console.log('Payment sent:', payment.paymentHash);
    return payment;
}

// Example: Pay a merchant
sendLightningPayment('lnbc500n1...');

# Simplified AMP implementation
import hashlib
import secrets

def create_amp_payment(preimage, amount_sats, num_parts=4):
    """
    Create an Atomic Multi-Path payment
    """
    # Generate a root preimage
    root_preimage = secrets.token_bytes(32)
    root_hash = hashlib.sha256(root_preimage).digest()
    
    # Generate per-part preimages
    parts = []
    for i in range(num_parts):
        part_preimage = bytes([i]) + root_preimage
        part_hash = hashlib.sha256(part_preimage).digest()
        
        parts.append({
            'index': i,
            'preimage': part_preimage.hex(),
            'hash': part_hash.hex(),
            'amount': amount_sats // num_parts
        })
    
    return {
        'root_hash': root_hash.hex(),
        'parts': parts,
        'total_amount': amount_sats
    }

def verify_amp_payment(root_preimage, parts):
    """
    Verify all parts of an AMP payment
    """
    expected_root = hashlib.sha256(root_preimage).digest()
    
    for part in parts:
        part_preimage = bytes([part['index']]) + root_preimage
        computed_hash = hashlib.sha256(part_preimage).digest()
        
        if computed_hash.hex() != part['hash']:
            return False
    
    return True

Lightning Network 2026:
  Capacity: 15,000+ BTC
  Nodes: 80,000+
  Public Channels: 400,000+
  Average Channel Size: 40,000 sats
  Daily Volume: $50M+

# Install LND (Lightning Network Daemon)
wget https://github.com/lightningnetwork/lnd/releases/download/v0.18.0/lnd-linux-amd64-v0.18.0.tar.gz
tar -xzf lnd-linux-amd64-v0.18.0.tar.gz
sudo install -m 0755 lnd-linux-amd64/lnd /usr/local/bin/
sudo install -m 0755 lnd-linux-amd64/lncli /usr/local/bin/

# Create configuration
mkdir -p ~/.lnd
cat > ~/.lnd/lnd.conf <<EOF
[Application Options]
externalip=YOUR_PUBLIC_IP
listen=0.0.0.0:9735

[Bitcoin]
bitcoin.active=true
bitcoin.mainnet=true
bitcoin.node=neutrino

[Neutrino]
neutrino.addpeer=bb2.breez.technology
neutrino.addpeer=lightning.greenhouse.net:9735

[RPC]
rpclisten=0.0.0.0:10009

[Web]
web.listen=0.0.0.0:8080
EOF

# Start LND
lnd &

// Simple Stacks contract (Clarity)
;; Clarity smart contract example: Token Registry
(define-map registry 
  ((principal principal))
  ((name (string-utf8 256))
   (url (string-utf8 256))
   (registered-at uint)))

;; Register a name
(define-public (register-name (name (string-utf8 256)) (url (string-utf8 256)))
  (let ((sender tx-sender))
    (map-set registry
      {principal: sender}
      {name: name, 
       url: url, 
       registered-at block-height})
    (ok true)))

;; Get name by principal
(define-read-only (get-name (owner principal))
  (map-get? registry {principal: owner}))

# sBTC protocol overview
class sBTCToken:
    """
    sBTC allows Bitcoin to be used in Stacks DeFi
    """
    
    def __init__(self, stacking_contract, btc_release_client):
        self.stacking_contract = stacking_contract
        self.btc_release_client = btc_release_client
        self.total_supply = 0
        self.collateral_ratio = 1.5  # 150% overcollateralization
    
    def deposit(self, btc_amount, stacks_wallet):
        """
        Lock BTC and mint sBTC
        """
        # 1. Receive BTC deposit
        btc_tx = self.btc_release_client.receive_deposit(btc_amount)
        
        # 2. Verify deposit confirmation
        confirmations = self.btc_release_client.get_confirmations(btc_tx)
        assert confirmations >= 6, "Need 6 confirmations"
        
        # 3. Mint sBTC at 1:1 ratio
        sbtc_minted = btc_amount * 1_0000_0000  # Convert to sats
        self.total_supply += sbtc_minted
        
        # 4. Transfer sBTC to Stacks wallet
        self.stacks_token_transfer(stacks_wallet, sbtc_minted)
        
        return sbtc_minted
    
    def withdraw(self, sbtc_amount, btc_address):
        """
        Burn sBTC and release BTC
        """
        # 1. Verify collateral ratio
        assert self.get_collateral_ratio() >= self.collateral_ratio
        
        # 2. Burn sBTC
        self.burn_tokens(sbtc_amount)
        
        # 3. Initiate BTC release
        btc_sats = sbtc_amount // 1_0000_0000
        self.btc_release_client.initiate_withdrawal(btc_address, btc_sats)
        
        return True

// Liquid API example (Elements/Blockstream)
const { Liquid } = require('liquidjs');

async function createLiquidWallet() {
    const liquid = new Liquid({
        network: 'liquid mainnet',
        // Generate or import your master seed
        mnemonic: 'your twenty four word mnemonic...'
    });
    
    // Get a new address
    const address = await liquid.getAddress();
    console.log('Liquid address:', address.confidential);
    
    return liquid;
}

async function sendLiquidAsset(liquid, toAddress, amount, asset) {
    // Create confidential transaction
    const tx = await liquid.createTransaction({
        outputs: [{
            address: toAddress,
            amount: amount,
            asset: asset  // e.g., 'USDT' asset ID on Liquid
        }],
        fee: 100  // sats per vbyte
    });
    
    // Sign and broadcast
    const txHex = await tx.sign();
    const txid = await liquid.broadcast(txHex);
    
    console.log('Transaction broadcast:', txid);
    return txid;
}

# Simplified Babylon staking mechanism
class BabylonStaking:
    """
    Bitcoin staking protocol for PoS chains
    """
    
    def __init__(self, btc_finality_gadget, slashing_contract):
        self.btc_finality = btc_finality_gadget
        self.slashing_contract = slashing_contract
        self.active_stakes = {}
    
    def stake(self, btc_address, pos_chain_id, amount, duration):
        """
        Stake BTC to secure a PoS chain
        """
        # 1. Create Bitcoin staking transaction
        staking_tx = self.create_staking_tx(btc_address, amount, duration)
        
        # 2. Submit stake to PoS chain
        stake_id = self.submit_stake(
            chain_id=pos_chain_id,
            btc_staking_tx=staking_tx,
            start_height=self.get_btc_height(),
            duration=duration
        )
        
        # 3. Store stake information
        self.active_stakes[stake_id] = {
            'btc_address': btc_address,
            'chain_id': pos_chain_id,
            'amount': amount,
            'duration': duration,
            'start_height': self.get_btc_height()
        }
        
        return stake_id
    
    def detect_and_slash(self, pos_chain_id, malicious_validator):
        """
        Detect misbehavior and slash the stake
        """
        # 1. Check if PoS chain reported double signing
        evidence = self.get_slashing_evidence(
            chain_id=pos_chain_id,
            validator=malicious_validator
        )
        
        if evidence:
            # 2. Extract BTC stake from evidence
            stake_info = self.find_linked_stake(evidence)
            
            # 3. Slash the BTC stake
            self.slashing_contract.slash(
                stake_info['btc_address'],
                stake_info['amount']
            )
            
            return True
        
        return False
    
    def unbond(self, stake_id):
        """
        After locktime expires, unbond staked BTC
        """
        stake = self.active_stakes[stake_id]
        
        # Verify locktime has passed
        current_height = self.get_btc_height()
        unbond_height = stake['start_height'] + (stake['duration'] * 144)  # ~1 day per duration unit
        
        assert current_height >= unbond_height, "Locktime not expired"
        
        # Release funds
        self.release_stake(stake['btc_address'], stake['amount'])
        
        del self.active_stakes[stake_id]
        return True

// Simplified BTC lending protocol (Rootstock example)
interface IBTC {
    function transfer(address to, uint256 amount) external returns (bool);
    function transferFrom(address from, address to, uint256 amount) external returns (bool);
}

contract BTCLending {
    mapping(address => uint256) public deposits;
    mapping(address => uint256) public borrows;
    uint256 public totalDeposits;
    uint256 public totalBorrows;
    
    uint256 public collateralFactor = 80;  // 80% LTV
    uint256 public liquidationThreshold = 85;
    
    event Deposit(address indexed user, uint256 amount);
    event Borrow(address indexed user, uint256 amount);
    event Liquidate(address indexed liquidator, address indexed user, uint256 debt);
    
    function deposit() external payable {
        deposits[msg.sender] += msg.value;
        totalDeposits += msg.value;
        emit Deposit(msg.sender, msg.value);
    }
    
    function borrow(uint256 amount) external {
        require(deposits[msg.sender] > 0, "No collateral");
        
        uint256 maxBorrow = (deposits[msg.sender] * collateralFactor) / 100;
        require(amount <= maxBorrow, "Exceeds collateral");
        
        // Check health factor
        require(getHealthFactor(msg.sender) > 1, "Unhealthy position");
        
        borrows[msg.sender] += amount;
        totalBorrows += amount;
        
        IBTC(wbtc).transfer(msg.sender, amount);
        emit Borrow(msg.sender, amount);
    }
    
    function getHealthFactor(address user) public view returns (uint256) {
        if (borrows[user] == 0) return type(uint256).max;
        
        uint256 collateralValue = deposits[user];
        uint256 borrowValue = borrows[user];
        
        return (collateralValue * 100) / borrowValue;
    }
}

// Integrating Lightning payments into a web app
const lnurl = require('lnurl');
const axios = require('axios');

class LightningPaymentService {
    constructor(lndNode, webhookUrl) {
        this.lnd = lndNode;
        this.webhookUrl = webhookUrl;
    }
    
    // Generate a payment request for a specific amount
    async createInvoice(amountSats, description) {
        const invoice = await this.lnd.addInvoice({
            value: amountSats,
            memo: description,
            expiry: 3600  // 1 hour
        });
        
        return {
            paymentRequest: invoice.payment_request,
            paymentHash: invoice.r_hash.toString('hex'),
            expiresAt: invoice.expires_at
        };
    }
    
    // Generate LNURL for easy mobile payments
    async createLNURL(amountSats, description) {
        const invoice = await this.createInvoice(amountSats, description);
        
        // Create LNURL-auth encoded payment
        const lnurlEncoded = lnurl.encode(
            `lightning:${invoice.paymentRequest}`
        );
        
        return {
            lnurl: lnurlEncoded,
            invoice: invoice
        };
    }
    
    // Verify payment via webhook
    async verifyPayment(paymentHash) {
        const invoice = await this.lnd.lookupInvoice({
            r_hash: Buffer.from(paymentHash, 'hex')
        });
        
        return {
            settled: invoice.settled,
            amount: invoice.amt_paid_sat,
            settleDate: invoice.settle_date
        };
    }
    
    // Listen for incoming payments
    async startPaymentListener() {
        const stream = this.lnd.subscribeInvoices();
        
        stream.on('invoice_update', async (invoice) => {
            if (invoice.state === 'SETTLED') {
                // Trigger webhook
                await axios.post(this.webhookUrl, {
                    paymentHash: invoice.r_hash.toString('hex'),
                    amount: invoice.amt_paid_sat,
                    memo: invoice.memo
                });
            }
        });
    }
}

// Usage
const lightning = new LightningPaymentService(
    myLndNode,
    'https://myapp.com/webhook/lightning'
);

// Create payment link
const payment = await lightning.createLNURL(
    1000,  // 1000 sats
    'Premium subscription'
);

console.log('Pay with Lightning:', payment.lnurl);