The capacity of Bitcoin’s lightning network has, in BTC terms, been declining since March of this year, as it appears one of the biggest entities on the network has been closing unused channels.
According to data from Bitcoin Visuals the current capacity of the flagship cryptocurrency’s layer-two scaling solution is of around 909.2 BTC, equivalent to $1.9 million. The network’s capacity notably hit 1,000 BTC in March of this year, and after reaching a 1,100 BTC peak, its capacity started declining.
Note that the network’s capacity in terms of US dollars has been rising because the cryptocurrency’s price has been rising this year, and is currently trading close to the $10,000 mark. In December of last year, it was at $3,200.
Last month, CryptoGlobe reported that the lightning network’s capacity dropped 13% in a 30-day period, causing concern. The drop occurred because LNBig, a large node operator on the network, started closing channels that weren’t being used.
The node operator further revealed at the time he controlled around 473 BTC on the network, and that he was keeping some channels open in order to provide it with liquidity. LNBig revealed he would’ve liked to close more channels, but was concerned about the impact it would have on the community.
The continuous decline the LN has seen since March may, however, be related to the operator closing unused channels. Via the microblogging platform Twitter, he has been revealing channel closures. Nevertheless, LNBig noted he’s being careful so the capacity doesn’t drop below 900 BTC.
I have other same channels (80 days old which were opened by me and which were not used up to present time) - 72 BTC. But I will close these channels slowly so that the network capacity does not fall below 900.— lnbig_com (@lnbig_com) July 22, 2019
Despite the channel closures, the drop also seems to show that new users aren’t opening channels on the lightning network at a fast enough rate to counter it, suggesting adoption hasn’t been growing as expected.
Bitcoin Visuals data shows that the number of LN nodes has been relatively stable since March, while the number of open channels has also been declining.
Curiously, bitcoin usage has been growing. As covered, data from the same source shows that transaction inputs and transaction outputs on the Bitcoin network are close to their all-time highs. Users are nevertheless still paying relatively high fees, with the average transaction fee on the BTC blockchain being of $1.76, according to BitInfoCharts.
At the time LNBig announced he closed some of his unused channels, he noted he would be happy to see other “large players” open channels and improve the network’s liquidity, but added that “oddly enough this almost does not happen.”