Bitcoin Lightning Network: the capacity is steadily decreasing
Bitcoin

Bitcoin Lightning Network: the capacity is steadily decreasing

By Emanuele Pagliari - 8 Oct 2019

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Those who often follow the statistics of the Bitcoin Lightning Network, the second layer of BTC, may have noticed a decline in network capacity in recent months.

Analysing the statistics reported by tools such as 1ML or Bitcoinvisuals it is possible to notice how the Bitcoin Lightning Network capacity has been in constant decline since the beginning of June, after having reached a peak of 1098 BTC in mid-May. Whereas in June, LN’s capacity suffered a sharp drop of almost 70 BTC, and then gradually began a slow decline to this day.

At the moment, in fact, the capacity of the Lightning Network is around 800 BTC, with a drop from its peak close to 25%. Although it is difficult to understand the real reasons for this slow but inexorable decline, these are not worrying data, given that the network is in better shape than ever, with the number of nodes constantly increasing.

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Decreasing capacity of the Bitcoin Lightning Network: possible reasons

Analysing the possible causes of this decline, a reason for the decrease in capacity of the Bitcoin Lightning Network may be closely related to the drop in fees required to execute transactions on the first layer of BTC.

In recent months, in fact, particularly from mid-August onwards, congestion in the BTC network has slowly decreased, thus allowing users to carry out transactions with relatively low fees. In particular, at the beginning of August, the average price of fees to be paid for each transaction fell back below the dollar threshold, while in recent days the threshold of 20 cents per transaction has been touched several times.

Looking at the price history, the annual peak was reached between May and June, with fees for transactions on the BTC blockchain exceeding the $6 threshold.

This was not a mere and temporary peak. For the whole month of April, May and June, fees remained well above the quota of one dollar, with several days above three dollars for a transaction to be confirmed in the shortest possible time (first block available). All this obviously happened in conjunction with the historical peak of transactions managed by the BTC network, which last May touched the 450 thousand transactions per day.

With the drop in the price of fees for on-chain transactions, many have decided to close some channels on the LN network, thus moving their funds, leading to a decline in the capacity of Bitcoin Lightning Network.

Emanuele Pagliari
Emanuele Pagliari

Telecommunications engineer with a strong passion for technology. His adventure in the world of blogging started on GizChina.it in 2014 and then continued on LFFL.org and GizBlog.it. Emanuele is in the world of cryptocurrency as a miner since 2013 and today he follows the technical aspects related to blockchain, cryptography and dApp, also for applications in the Internet of Things.

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