Valet, as an example of such an implementation, stands out by supporting both hosted and traditional LN channels. This dual support is highlighted by a unique feature titled "Drain fiat channel," which allows for the conversion of fiat-denominated channels into real LN channels.

The concept of Fiat channels extends further into what are termed "Credit channels." These channels represent an innovative approach to liquidity provision, where the host essentially lends fiat-denominated liquidity to users. The mechanism underlying this feature involves using a real LN channel belonging to the user as collateral or a security measure. This development opens up new avenues for liquidity management and credit provision within the LN ecosystem, potentially enhancing its flexibility and utility for users seeking diverse financial services.