The Lightning Network, Bitcoin’s layer-2 solution, has achieved a record capacity level as major crypto exchanges increasingly adopt it and enhance its functionalities.
On Monday, the capacity of the Lightning Network (LN) reached 5,606 BTC, surpassing its prior high from March 2023, according to Bitcoin Visuals.
Amboss, an LN analytics platform, also reported a capacity peak of 5,637 BTC on Tuesday, valuing approximately $490 million.
Following a year of decreases, data indicates a capacity increase in November and December, as more Bitcoin was integrated into the network, facilitating quicker and more economical transactions.
The quantity of Lightning nodes that establish payment channels among themselves, funded with Bitcoin (BTC), stood at 14,940, down from a peak of 20,700 in March 2022, while the connections between these nodes were at 48,678, also declining from a 2022 high.
The information suggests that while more Bitcoin is being added to the LN, there isn’t a corresponding rise in usage as indicated by the number of nodes and channels.
Growth in LN adoption by companies
“It’s not just one company that’s increasing the Bitcoin flow into the Lightning Network; this trend spans multiple entities,” remarked Amboss.
They emphasized that major crypto exchanges like Binance and OKX have been depositing additional BTC onto the LN recently, contributing to the capacity surge.
Related: Tether leads $8M funding for Lightning startup focused on stablecoins
On Tuesday, stablecoin issuer Tether announced it had led an $8 million funding round into Bitcoin startup Speed to facilitate stablecoin payments over the LN.
In the meantime, crypto wallet MetaMask introduced Bitcoin support this week, although it clarified that transactions will employ the Native SegWit derivation path and not use the Lightning Network.
Taproot Assets receives an upgrade
On Wednesday, Lightning Labs announced an upgrade of Taproot Assets to v0.7, allowing for reusable addresses, a fully auditable asset supply, and enhanced transaction reliability.
Taproot Assets is a multi-asset Lightning protocol allowing for the minting of assets like stablecoins on Bitcoin and their transfer via the LN.
Currently, stablecoins mostly operate on centralized or less secure networks; Taproot Assets allows them to utilize Bitcoin’s security while achieving rapid, low-cost transfers through the LN.
The new auditable supply feature guarantees transparency without necessitating trust, which could potentially enable Bitcoin and Lightning to evolve into a multi-asset network, according to Lightning Labs.
“With this release, we are laying the foundation for trillions of dollars to flow on Bitcoin and Lightning.”
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