The Bitcoin network has seen multiple innovative solutions to help scale the ecosystem. Gaining more support for the Lightning Network remains a crucial objective in this regard. The overall LN capacity proliferates as of late, indicating a power shift may be on the horizon.
More Lightning Network Capacity
At its core, the Lightning Network for Bitcoin will serve as a crucial upgrade. It is capable of facilitating instant and cheap transactions for any amount in a peer-to-peer fashion. In its current form, Bitcoin isn’t suitable for buying a newspaper or coffee. With the Lightning network, that situation changes for the better, unlocking new potential use cases.
However, that can only happen if there is enough BTC on the Lightning Network layer. As this scaling solution operates on top of Bitcoin’s original technology, users need to make funds accessible through manual actions. Compared to the ecosystem’s overall liquidity, the LN capacity remains relatively meaningless. That situation is improving in recent weeks, though, which is intriguing.
Just this week, the LN capacity has increased from 1,700 BTC to 1,800 BTC. AAt the current price that is an extra $3.2 million in liquidity. No one knows where it comes from, but it is a welcome addition to this network layer. More liquidity means it becomes easier to complete transactions. Whether those are small or large amounts becomes less of a factor as there is more overall capacity.
Public Lightning Network capacity just broke 1,800 BTC.
It only took 6 days to go from 1,700 BTC to 1,800 BTC.
Growth is accelerating.
— Kevin Rooke (@kerooke) July 12, 2021
However, one can argue this liquidity still is far too low. There are over 250,000 BTC wrapped into other tokens on Ethereum for DeFi purposes. The Lightning Network has no decentralized finance solutions [yet], which may hinder its adoption a bit. However, non-custodial derivatives trading is accessible through LNMarkets, for example. It is up to developers to build new use cases for LN liquidity.
Overall LN Statistics Look Healthy
Other than liquidity, the Lightning Network can only thrive with enough nodes and payment channels.. There is notable growth across these segments, which is good to see. However, this has been long overdue, as the LN upgrade for Bitcoin took place years ago. These statistics should be much higher by now.
Nearly 13,000 LN nodes now have payment channels, which is a good sign. There’s only one node without channels, although that can be resolved with relative ease. There are also nearly 48,000 unique payment channels, a substantial increase compared to the under 30,000 a year ago. Every node now has 8.7 channels on average, a number that will need to increase moving forward.
There is also the overall capacity per Lightning Network node. More capacity would be beneficial, yet the average seems to hover near $9,500 for some time now. It is a respectable amount, but one that leaves much room for future improvements. The ongoing growth of Bitcoin’s LN needs to accelerate before this technology is ready for broader adoption.