The Lightning Network, the go-to layer two solution for Bitcoin (BTC), saw itself grow by 75% throughout the past year. The network reached a record-high node count of 8,900 back on the 8th of February, 2021. This comes by way of Bitcoin Visuals’ LN Monitors.
A Recent Spike In Activity
It should be noted, however, that a sizable amount of these nodes only joined up more recently. This, in turn, suggests that some of the Bitcoiners are starting to be attracted to layer-two solutions amid the ever-rising transaction fees of the Bitcoin network.
The total amount of Bitcoin locked within Liquid Network channels has remained more or less the same, going up and down between 1,000 and 1,100 ever since August of 2020. However, the same can’t be said of the dollar value of these assets, as they’ve risen up by a staggering 250% within the past few months. As a result, the Lightning Network boasts a record $42.72 million in Total Value Locked (TVL).
Layer Two Solutions For BTC Still Not That Attractive
As it stands now, there’s a total number of around 38,600 channels between nodes, which itself is the highest it’s ever been since May of 2019. It should be noted, however, that this is excluding channels within between private nodes.
It’s been three years since the launch of Lightning Network, but the layer two network is still facing an upwards battle. The network is still failing to achieve a meaningful level of adoption and onboarding new participants is a struggle. The big issue comes with the technical requirements that are needed to fund a Lightning node and maintain a channel, with many Bitcoin users simply not interested in it as a result. Bitcoin’s community as a whole is just biding its time until Lightning figures out how to make it convenient and user friendly.
Big Exchanges Keen For L2 Solutions
Big exchanges are the opposite, however. It was back in December last year when Kraken revealed that it plans on integrating the Lightning Network to its exchange within 2021’s first half. A similar announcement was made just last week by OKEx, with the expectation being that it will roll out support for LN within the next quarter.
Bitfinex had also been offering conversions of LN funds, without any fees, for more than a year, now. The exchange has gone the extra step, supporting Liquid BTC, as well. Liquid stands as the competing Layer 2 solution for Bitcoin, powered by smart contracts. Bitfinex doesn’t mind, however, as Liquid and Lightning can both be easily exchanged for Bitcoin on-chain at the exchange.
It’s predicted that inter-exchange fund transfers will quickly start to be both cheaper and faster as more and more exchanges start adopting Bitcoin’s layer two solutions. It’s predicted that standard transaction fees will slowly be replaced by the median base fee of Lightning: A single Satoshi.