Side-chain

The Lightning Network is usually implemented as a Layer-2, sitting on top of a Layer-1. Lightning is currently implemented for the layer-1 blockchains of Bitcoin and Litecoin . BOLT compliant implementations (e.g. Lnd , Eclair ) use On-chain transactions and do not have their only coin(s).

In contrast to the typical Lightning Network implementation exist other implementations such as Liquid by Blockstream that implement Lightning functionality as a Side-chain. Being a side chain, these implementations have their own coins and can even create a multitude of their own tokens.

References

• Blockstream
• Liquid enterprise product using Lightning as a side-chain
• JPY stable coin as token on Liquid side-chain