Economics

LN Total Value Locked

In late 2021, the public bitcoin capacity on the LN has grown to hold a bitcoin capacity of around 3,000 BTC which is more than USD 120 million at the time of writing. Estimates show the LN processed 663,000 transactions into and from commonly used wallets, with around 10 million lightning-enabled wallets in September 2021 (Arcane Research Report, 2021).

The number of Lightning Nodes has been growing so fast that there are now more than 2x more nodes than conventional Bitcoin full nodes. In January 2022, there were over 32,000 nodes counted.

Find more details: Working Paper

Speaking to the massive adoption the LN saw in 2021, the total number of LN nodes more than doubled, LN channels increased by roughly +130%, the average channel capacity increased by about +35% in bitcoin terms, and the average node capacity increased around +110% to nearly USD 10,000.00 (Kraken Intelligence Report, 2022).

From the beginning of 2021 to the end of August, lightning wallet payment volume grew by 20% monthly with the equivalent number for public channel capacity being 10% (Arcane Research Report, 2021). In September, “the discrepancy widened further, with payment volume almost doubling relative to a 26% increase in public channel capacity.” Research shows “an estimated 27.8% of all lightning channels were private in January 2020.” Industry-leading experts assume the share of private channels on the LN could be even higher now (Arcane Research Report, 2021).

Comparing the various recent data sources, the average numbers suggest the following:

• An average channel size between 0.03 and 0.04 BTC (i.e. 3M–4M sat).
• A Compound Annual Growth Rate (CAGR) of 34.49% (based on the YTD growth rate of the total sat locked in the LN).

The number of payment channels on the LN has been steadily growing in correlation to the total bitcoin amount locked (suggesting a constant channel size in BTC).

Find more details: Working Paper

Looking at the figures more closely in retrospect, the strong growth can already be seen in the first quarter of 2021.

The Total Value Locked (TVL) of the LN was over USD 70M by end of April 2021, double the amount compared to the beginning of 2021.

It can be stated that the increase in value is substantial and tends to be faster than generally expected.

If the multiyear uptrend continues, it would not be unreasonable to see nearly 5,000 BTC locked in the LN in by 2026.

Estimates show the potential of almost “700 million users on the LN from gaming, video, and audio in 2030.” With streaming of lightning payments through these services, researchers project an estimate that equals “no less than 364 trillion lightning transactions per year” (Arcane Research Report, 2021).