Bitcoin Lightning Network capacity hits record high…exchanges' expanded adoption a factor

The Bitcoin layer-2 payment network Lightning Network has recorded its largest-ever capacity, helped by major crypto exchanges' expanded adoption and feature improvements. The amount of Bitcoin deposited in the network has rapidly increased, drawing renewed attention to its role as a low-cost, high-speed payment infrastructure.

On the 17th (local time), Cointelegraph reported that the Lightning Network's total capacity was 5,606 Bitcoin as of the previous day, surpassing the previous peak recorded in March 2023. Bitcoin Visuals counted 5,606 Bitcoin as the peak, and the Lightning Network analytics platform Amboss said it rose to 5,637 Bitcoin as of the 17th, a day later. This is about $490 million.

According to the data, Lightning Network capacity declined through the first half of this year but sharply rebounded in November and December. This is interpreted as a result of increased Bitcoin flowing into the network, improving payment processing speed and cost efficiency.

Meanwhile, network participation indicators showed mixed trends. The current number of Lightning nodes is 14,940, down from 20,700 recorded in March 2022. The number of payment channels between nodes is 48,678, also down from the 2022 peak. This means that although more Bitcoin is deposited in the network, it is not translating into increases in node and channel counts.

Industry observers see exchange-centered adoption expansion as the key background to this capacity increase. Amboss said, "It's not one particular company, but overall more Bitcoin is flowing into the Lightning Network," explaining that large exchanges such as Binance and OKX have recently added Bitcoin deposits to the Lightning Network.

Expansion of the Lightning ecosystem is also increasing the potential for integration with stablecoins. Tether recently invested $8 million in the Bitcoin startup Speed and said it would support Lightning Network-based stablecoin payments. By contrast, MetaMask added Bitcoin support this week but did not use the Lightning Network, adopting the native SegWit method.

Technical progress is also continuing. Lightning Labs upgraded Taproot Assets to v0.7, saying it supports reusable addresses, auditable asset issuance, and larger, more reliable transactions. Taproot Assets is a multi-asset protocol that allows various assets such as stablecoins to be issued on top of Bitcoin and transmitted via the Lightning Network.

Lightning Labs said the update lays the groundwork for Bitcoin and the Lightning Network to evolve into a multi-asset payment network, and projected that trillions of dollars could move over Bitcoin payment infrastructure in the long term.