Bitcoin has scaling issues. It’s almost by design at this point. Not sure was there a vision in the very early days when the network was started by Satoshi Nakamoto, but after the block wars of 2017 the path has been chosen. The path is small blocks on layer one, limiting the amount of data that can be stored and transacted on the network. The scaling solutions for Bitcoin are now left to Layer 2s.
The Lightning Network is one of those solutions. It is not the only one though. There are other solutions like Liquid, Fedimint, Drivechains etc.
Here we will be looking at the data for the Lightning network. A short explanation from ChatGPT:
The lightning network operates through the creation of payment channels between users, which allow for transactions to occur off the main blockchain. These transactions are only settled on the blockchain when the channels are closed, reducing the burden on the network and enabling the consolidation of many transactions into one. This system relies on smart contracts to ensure the security and fulfillment of transactions without the need for third-party intermediaries
In theory everyone can run a lightning node, its light, there is now a custom Raspberry Pi that does this. The process starts with opening a channel to another wallet that is on chain transaction with fees. But after the channel is created the two wallets can transfer sats for a tiny tiny fee of usually one sat per transaction (0.000512 USD currently). You can open a channel to some of the major nodes that are connected to a lot of the other nodes and indirectly have access to all those nodes. No need to open multiply channels if you are an individual.
Building the lightning network is a slow process, nodes are opened one by one, as well as channels. This takes time.
Here we will be looking at:
- Number of nodes
- Number of channels
- BTC balance on lightning
- Number of channels per node
- Capacity per node
- Top lightning nodes
- Transactions
The data is collected from sources like bitcoinvisuals.com, 1ml.com, lightningnetwork.plus etc.
Number of Lightning Nodes
Here is the chart for the historical data for the number of lightning nodes.
This chart shows the number of nodes with and without channels.
We can see that since its launch in 2018 the number of lightning nodes have grown. They have grown more aggressive in 2020 and 2021 reaching an ATH of 20k nodes at the end of 2021. Then in 2022 a sharp drop to around 17k, since when the number of lighting nodes has remained constant around that number in the last two years. At the moment there are around 16k lightning nodes.
As mentioned, running a node is quite easy for a little bit technical people. You can do it on a small home computer or Raspberry, or to choose a some cloud provider.
Number of Channels
Each node can open multiple channels to other nodes, meaning the number of channels is greater than the number of nodes. The more channels the better the network is interconnected. Here is the chart.
This chart follows the node chart to some extent with more aggressive numbers. The number of channels has grown aggressively in the 2020-2021 period, reached and ATH to 84k, and started going down in 2022. At the moment there are 60k channels. Will see does this number will increase in the future as we are now in a small bull run, while the fees on layer 1 have increased in the period.
BTC Balance on Lightning
When a node is created and channels opened, they are usually funded with Bitcoin transferred from layer 1 to lightning. Each channel has some amount of Bitcoin on it. The collective amount of Bitcoin on all the Lightning channels represents how much BTC is transferred to the network. This is usually referred as lightning capacity.
Here is the chart.
The chart above has the info for BTC and USD value. In terms of USD value, the lightning network is now at ATH high with more than 200M worth of Bitcoin deposits. In terms of Bitcoin, in the last period it has dipped a bit from 5500 to around 5k BTC where it is now.
In terms of share from the total supply this is a relatively low number to 0,025%.
Number of Channels per Node
How many channels each node has opened? Here is the chart.
We can see that in the beginning the number of channels per node has grown to 20 channels per node. This is due to the fact that at the beginning there were not a lot of nodes. As the network grew, the number of channels per node dropped, since some of the nodes don’t have opened channels, or have just one channel. In the last years the number of channels per node has stabilized around the 8 channels.
Capacity/Balance per Node
Each node funds its channels with Bitcoin/Sats. Here is the chart.
This is the average amount of SATS per nodes.
As we can see there has been a sharp increase in the beginning to 50M stats per node, then a drop towards 20M stats per node and a growth in 2022 and 2023. Interestingly, the amount of average SATS per node has increased in the bear market, probably due to more node shutting down in the bear market, leaving only the well-funded nodes.
In the last period on average there is around 60M SATS per node, that is equivalent to around 30k USD with todays BTC prices.
- Top lightning nodes
- Transactions
Top Lightning Nodes
Which lightning nodes hold the most BTC. Here is the chart.
The ACINQ nodes is on the top here with 455 BTC on its lightning node. Although if we take a look at the other nodes, we will see that Bitfinex and LNBIG have multiple nodes, so if sum those up, LNBIG will come on the top, with Bitfinex second. Some of the other exchanges in the top lightning nodes as well, like Kraken, Binance, OKX and the WalletOfSatoshi that is the simplest lightning wallet, but its custodian.
Overall, the lightning network seems to have grown a lot in 2020 and 2021 but slowed down a bit in 2022-2023. Meanwhile, most of the top exchanges have implemented lighting, Coinbase included, but it is still not in the top 10. More companies are building infrastructure, and the network is much more developed then a few years ago. More companies are accepting lighting as payment as well. We are now at the beginning of the next Bitcoin cycle, and we will see how things will evolve and will lightning will emerge as the network for mass user adoption.
All the best
@dalz
Thanks for this enlightening info about the world's most popular crypto, BTC. Let's hope btc will hit 60-70k before halving and that altcoins, especially hive will consequently rise in price also. Thanks for the info. Have a great day.
U welcome
Great summary @dalz. I'm not an active user on Hive, but when I come to consume content, yours is on my top list.
Recently, I started studying programming. I would like to learn how to retrieve data from various chains like you do. What technologies should I learn in order to do this?
I'm usualy using SQL for quering data ... but you need a database for that ... on Hive its HiveSQL, while for a lot of other chains its Dune Analytics ... plus a lot of others options .... also there are api where you can conect with python
Incredible work, as always. I'm wondering if running a lightning node is a viable business model for individuals to take on, but I couldn't find anyone sharing their experience running a node, with profits and what not.
There are some option to esrn from routing fees, but not much ... @brianoflondon might have some more info
The truth is that I have never paid much attention to Bitcoin Lightning Network, I have always been a little worried about security and centralization. But I am not an expert and perhaps my doubts are unfounded.
Thanks for sharing this. I have very little knowledge about BTC and the Lightning network, so this was very educational.
Very informative analysis about BTC
I was not aware of it and thanks to sharing details. I will try to get more about it.
Thank you for the information
I’ve actually used this service once but I hope to use it more and more times
!ALIVE
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Thank you so much for this information and update. It helps us to stay informed
It's helpful. Thanks for sharing
@tipu curate
Upvoted 👌 (Mana: 11/51) Liquid rewards.
Probably the technicality in creating a lightning network is something that is preventing most of the people from opening one.
There is some tech knowladge needed for sure
Thank you so much for updating us with the detail information about this
this scaling issues will be resolved with time.
Hi @dalz appreciate if you can mention me when your 2nd batch of hbd bond is announced. 😄
Ok, cool!
It would be interesting to see the biggest LN payment-based companies that pay wages and produce products. The whole LN Ecosystem is suffering from an endless Amazon voucher buying spree.