Bitcoin Lightning Network Hits All-Time High in Average Payment Channel Capacity

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Sending large sums of money through the Bitcoin Lightning (LN) network is becoming more feasible, thanks to the constant growth that the average capacity of its payment channels has experienced.

For this June 18, the average capacity of LN payment channels is 4.7 million satoshis, that is 0.047 BTC. It is the first time that this figure has been reached in the Bitcoin micropayment network. While, based on the current price of BTC in the market, the average record capacity of these channels is around USD 880.

Through the first half of 2022, the average transaction capacity offered by Lightning Network channels has increased by 17%. Interestingly, due to the crash in the market price of bitcoin, the average amount of fiat money at the beginning of this year was higher than today, around $1,800.


Bitcoin Lightning Network Hits All-Time High in Average Payment Channel Capacity
Bitcoin Lightning Network Hits All-Time High in Average Payment Channel Capacity
The red line in the graph shows the average capacity of LN’s payment channels. Font: Bitcoin Visuals

Channel capacity vs Total network capacity: which is worth more?

CriptoNoticias reported a few days ago that the Bitcoin Lightning network had reached a new milestone when its total transaction capacity exceeded 4,000 BTC. This means that, in theory, LN can house approximately USD 75 million that can be sent in portions between the channels that make up the network. However, this does not mean that one person can send such amount of money to another in a snap.

The true ability to send money in LN is measured by the payment channels, which are the ways that the nodes that make up this network communicate.

Another important aspect to take into account is that the capacity of payment channels is depleted as they are used. For example: Alicia opens a payment channel together with Pedro that has a capacity of 0.35 BTC. If Alice today sends 0.2 BTC to Pedro, but she wants to send another 0.2 BTC tomorrow, it will be impossible for her; since Alicia would only have 0.1 BTC of liquidity in her channel after her first transaction.

a forum user BitcoinTalk made a comment related to the issue of the capacity of LN’s channels and its global capacity. According to franky1, the total capacity of the network is a data as “insignificant” as the market capitalization of a cryptocurrency, since “it does not show a real utility”.

The payment routes in the Bitcoin Lightning Network

Payment channels not only establish the connection between one node and another, but also allow third-party payments to be routed through them. This means that youn online payment Lightning you can go through 3 or more different payment channels and nodes until you reach your destination. Only, for this to be possible, the available capacity of these channels must cover the amount of the payment in question. If not, payment cannot be made this way.

The solution to liquidity problems in payment channels when trying to make a transaction in LN is simply to re-fund the channel. It is also possible to balance it again, in the event that it originally had the necessary capacity to route a certain payment.

Although there are alternatives for when a transaction is greater than the liquidity available in a payment channel, the fact that the average capacity of these channels grows is encouraging, as it increases the usability of the Bitcoin Lightning network.

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