Data shows that since July 9, 2023, the Lightning Network’s capacity, or the total value of open channels, has decreased by more than 14%. A total of 786 BTC, worth an estimated $20.32 million, have reportedly been removed from the secondary network since a peak of 5,468 BTC.
Data from US Bureau of Labor Statistics show that between July and August, there was a staggering decrease of 1.223million native-born people in the workforce – which is a low not beaten since the jobs crash when Covid hit in April 2020.
— cinsdragon (@GellerCindi) September 5, 2023
From Peak to Plunge: Lightning Network’s Capacity Drops by Over $20M in Just Two Months
A second-layer (L2) scaling solution called the Lightning Network (LN) is used to make bitcoin (BTC) transactions faster and more affordable. LN users create a mutual “channel” for transactions instead of registering each transaction on the Bitcoin blockchain. On the blockchain, channels’ opening and closing balances are the only records kept. The total value locked (TVL) in open channels, also known as LN capacity, reached an all-time high this year.
Do you think that strikes of lightning are actually Keqing using her plunge attack from the top of Qinyun Peak to hit whatever poor enemy that's at the mountain's foot?
— Paimon Loves You!! (@NoEmergencyFood) November 17, 2020
On July 6, 2023, the LN capacity reached 5,468 bitcoin. But after reaching this milestone, a sizable sum of BTC was lost in one of the biggest drops since tracking started in January 2018.
Liquid, yet another alternative network developed by Blockstream, has seen a drop in capacity this year. The Liquid network had 3,556 LBTC in March 2023; by September, that number had decreased to 2,736 LBTC. The number of LBTC has decreased by 820 tokens since March 2023 as a result. Although the cause of the decreases in both protocols is yet unknown, a total of $41.52 million worth of bitcoin has been removed from both networks.