The Lightning Network is a layer-2 solution built on top of the Bitcoin blockchain, and its primary objective is to address the Bitcoin network’s scalability issues. It also allows for faster and cheaper transactions by facilitating off-chain payments through a network of payment channels.
The Lightning Network has gained traction since its launch in 2018, hitting a total value locked of $140 million, but this is relatively small compared to Bitcoin’s (BTC) $580 billion market capitalization. However, this oversimplification disregards that this scaling solution focuses on instant transactions, not lending, yield farms or other activities that require staking.
Additionally, the number of nodes has grown by a mere 6% since June 2022. This suggests that there are significant reasons why it has not achieved mainstream adoption. Let’s take a look at a few of the factors influencing Lightning Network growth.
Channel balancing, finding liquidity and the associated costs impact network growth
If Lightning Network users wish to make a payment that exceeds their channel balance, they must find a well-funded node with a direct channel to the recipient to facilitate the transaction. This process can be challenging and time-consuming, especially if the…
