The total value locked on the Lightning Network has tripled since last year to $1.3 billion despite bitcoin’s traversal of sub-$40,000 territory.
The number of bitcoins locked in the Lightning Network (LN) has tripled from 1089 BTC in 2021 to 3479 BTC, according to DeFi Pulse. The locked bitcoins are currently valued at $1.3 billion.
The catalyst behind the threefold increase in total bitcoins locked is the ability of the LN to allow fast and cheap transactions on the Bitcoin network.
The Lightning Network allows off-chain transactions on the second layer of the Bitcoin network. Two nodes on the Lightning Network can transact over a channel, deferring the transaction settlement to the main bitcoin network. Off-chain transactions that happen frequently and involve small amounts promote the scalability and utility of the Bitcoin network.
The Lightning Network can catalyze increasing the day-to-day utility of bitcoin as its capacity increases and as more people adopt it to transact in BTC.
Why the uptick in nodes?
Twitter launched Tips last year, featuring integration with Strike. Strike allows cross-border remittances and transactions in bitcoin with no fees. Miami’s Mayor Francis Suarez recently began accepting his paychecks in bitcoin via Strike, while El Salvador’s adoption of bitcoin as legal tender also contributes to the upsurge of Lightning Nodes.
Strike’s partnership with the government of El Salvador caused the network’s capacity to increase by 46% two months after the partnership was announced. This added 15,000 new nodes to the LN and added 1,500 bitcoins.
Strike rolled out limited payments functionality in Argentina on Jan 12, 2022. Payment provider CashApp announced in late January that it would implement LN to include over 30 million customers in the United States and the United Kingdom. The Lightning Network has responded ably to the surge in nodes, which bodes well for its future scalability prospects.
Bullish sentiment driving Lightning Network popularity
The Lightning Network’s growth could also indicate potential bullish sentiment on the price of bitcoin recovering, despite the downtrend from its all-time high of around $69,000 in November 2021.
Arjun Kharpal, the co-founder of the Huobi exchange, thinks Bitcoin could experience another bull run in 2024.
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