It was to be expected: due to the congestion problems on the Bitcoin mempool, there is a real boom in transactions over the Lightning Network.
This is being reported by Bitfinex in particular, which is one of the first crypto exchanges to implement BTC transactions via LN.
The exchange did this back in 2019, when LN was very little used.
Back then, there were less than 5,000 nodes and less than 32,000 channels globally, whereas today there are more than 18,000 nodes and channels have jumped to almost 80,000.
The fact is that with the congestion in the memory pool, the cost of fees for individual transactions has skyrocketed and the average time to validate transactions has increased.
Suffice it to say that there are currently more than 400,000 transactions in the mempool waiting to be validated, compared to approximately 600,000 validated transactions per day.
The solution: Lightning Network
There is a solution to Bitcoin’s mempool congestion problem.
It is the Lightning Network, which is Bitcoin’s main Layer-2, enabling instant transactions at almost negligible cost, and which currently has no real capacity limits.
In fact, 18,000 nodes are capable of handling far more transactions than the on-chain miners can handle, and even the huge demand there is these days.
If all the transactions in the mempool could take nearly 24 hours to validate, with LN they could be validated in a matter of minutes, or at most a few hours.
Furthermore, of the 400,000 transactions still in the mempool, some will certainly not be validated within 24 hours due to the low fees, but if they had been executed with LN, they would most likely have been executed already.
Booming activity on Lightning Network
Bitfinex CTO Paolo Ardoino said:
“Lightning is well-placed to ease congestion issues on the Bitcoin network. At Bitfinex we saw 11,000 transactions in the past 30 days and I expect this will only grow. We need more exchanges and more users of exchanges to push for Lightning in order to benefit from faster speeds and at much lower costs. Blockstream’s Liquid network is also a good secondary layer that can help in situations where mainchain is congested”.
On the one hand, these figures show that there is indeed a boom in the use of LN, but on the other hand they clearly indicate that it is still a very limited use overall.
On the other hand, if it were massively used, the Bitcoin mempool would probably not be congested.
In fact, BTC transactions via LN do not pass through either the blockchain or the mempool, so if this protocol were to be used, the mempool could also be emptied very quickly.
It is also important to remember that precisely because LN transactions do not go through the public Bitcoin blockchain, it is not possible to have public statistics on them.
Only the owner of a node is able to determine how many transactions pass through their node, and this information is not public unless the node owners disclose it.
The still limited use of LN
Given all this, the question arises as to why the use of LN is still so limited.
First of all, Ordinals, the Bitcoin inscriptions that cause most of the congestion, have to go through the blockchain and cannot be exchanged via LN.
Furthermore, it is not possible to transact BTC via LN with traditional wallets: you need special wallets to which you have to transfer part of your BTC.
Finally, in order to use an LN wallet, a channel needs to be opened, and opening an LN channel requires a transaction on the blockchain. At the moment, this is slowing down the creation of new LN channels.
Therefore, we will have to wait a while before the use of the Lightning Network becomes widespread, hoping that bitcoin’s mempool congestion problems do not worsen in the meantime.
It is worth noting that the number of transactions waiting on the mempool has actually decreased since yesterday, so for now the problem seems to be slowly receding.
In the meantime, however, bitcoin’s average fee per transaction has significantly exceeded Ethereum’s for the first time since July 2021.
Source: https://en.cryptonomist.ch/2023/05/09/bitcoin-boom-lightning-network/