Yield Sources
The yield generated for Rails Liquidity Providers (LPs) comes from two core activities on the Lightning Network: payment routing and liquidity leases through the Magma Marketplace .
Payment Routing
When you provide liquidity to the Lightning Network as a Rails LP, your Bitcoin helps facilitate transactions across the network. Every time a payment is routed through your node, you earn a small fee. These fees accumulate over time, contributing to your overall yield.
Liquidity Leases on Magma
The Magma Marketplace connects node operators like you with others needing liquidity to open or maintain payment channels. By leasing your liquidity, you earn additional returns while supporting the network’s dynamic efficiency.
Over the past four years, yields from these activities on Magma have ranged between 1-4% APY.
How Yield Is Maximized
Rails automates the process of deploying your Bitcoin across the Lightning Network to maximize both routing fee income and leasing returns. The platform handles:
| Action | Description |
|---|---|
| Channel selection & management | Opens channels with high-value routing partners. |
| Fee optimization | Sets competitive routing fees to attract payment flow. |
| Liquidity rebalancing | Maintains optimal channel balances for routing efficiency. |
| Magma marketplace | Lists your liquidity for lease automatically. |