According to LN Monitors in Bitcoin Visuals, the Lightning Network has grown 75% in the past year, breaking a record 8,900 nodes for the first time on February 8th.
Much of the growth has occurred in recent times, indicating that some Bitcoins are heading towards a solution of a different level, possibly as a way to avoid ever-increasing transaction fees.
The total number of BTCs blocked on LN channels has been in the range of 1,000 to 1,100 since August 2020, but the total dollar value has increased by 250% in recent months, which is the $ 42.72 million currently blocked in the network.
The total number of connections between nodes is currently around 38,600, the highest number since May 2019. This number does not reflect the channels between the private nodes.
Three years after its release, the Lightning Network is still struggling to attract new members and has yet to reach meaningful levels of adoption. Many regular Bitcoin users are not interested in the technical requirements to fund the Lightning node and maintain the channel, and prefer to stick to in-chain transactions until the experiment becomes less difficult.
However, large exchanges began to implement the network. In December 2020, Kraken shared its plans to merge the Lightning Network in the first half of 2021. OKEx made a similar announcement earlier last week and expects to roll out support for LN “next quarter”.
Bitfinex, which has been offering a commission-free transfer of LN funds for over a year, has taken an additional step to support Liquid BTC as well, Blockstream’s rival L2-smart Contract solution. Both Lightning and Liquid BTC can be easily exchanged for BTC online at Bitfinex.
As more exchanges are using Tier 2 based BTC deposit and withdrawal options, money transfers are expected to be much faster and cheaper, with the standard transaction fees substituted with the average Satoshi Lightning 1 base fee.
The Lightning Network was originally designed by Joseph Poon and Thaddeus Drya, who published white papers on the topic in January 2016. Realizing the limitations on Bitcoin’s (then) 1MB block size limit, Poon and Dridzha decided to create a method like BTC Transactions could Done in offline mode. The result is a network of independent smart contracts that Bitcoin can help increase the transfer rate of transactions per second.