A recent research study suggests that the increased adoption of Bitcoin as a transactional layer can be partially attributed to the growing number of cryptocurrency platforms joining the Lightning Network ecosystem.
This is demonstrated by the 40 million transactions settled on Bitcoin in the third quarter of 2023. However, the study conducted by Kaminari notes that only slightly over 6% of centralized crypto exchanges have integrated the layer 2 protocol into their platforms.
The data shows that the number of companies in the Lightning Network (LN) ecosystem has increased from 94 in October 2021 to 179 companies, covering 28 categories. Centralized cryptocurrency exchanges, including major platforms like Binance which integrated LN in July 2023, OKEx, and Bitstamp, have played a significant role in driving the increased adoption of the Lightning Network (LN).
2023 YEAR IN REVIEW
Only 6% of crypto exchanges have integrated the Lightning Network to conduct transactions with #Bitcoin .
14 crypto spot exchanges support Lightning compared to 211 without Lightning.@lightning pic.twitter.com/7gxyADDPcX
— BitKE (@BitcoinKE) January 14, 2024
Slightly over 6% of centralized cryptocurrency exchanges have integrated the layer 2 protocol into their platforms.
“There are currently 224 active centralized crypto exchanges, 14 of which are connected to the Lightning Network – in other words, only 6% of crypto exchanges currently use the Lightning Network to conduct transactions with Bitcoin,” says the Kaminari market research report.
Nonetheless, the study forecasts continued growth of Lightning use from the above platforms, in addition to the impending addition of the Lightning Network to Coinbase.
Crypto wallets, both custodial and non-custodial, are another significant growth factor for the Lightning Network (LN). However, similar to centralized crypto exchanges, the majority of crypto wallets have yet to integrate the LN. The report indicates that among the top 10 most popular wallets by user count, only two – Exodus and BitPay – have adopted the Layer 2 technology.
The research report anticipates upcoming developments such as RGB, a client-side validated state and smart contracts system operating on Layers 2 and 3 of the Bitcoin ecosystem, and the Taproot Assets protocols.
It suggests that these initiatives ‘will enable the creation of stablecoins compatible with the Lightning Network.’
These protocols are expected to contribute to the further evolution and capabilities of the Lightning Network ecosystem.
“This presents an opportunity for a significant migration of USDT transactions from Tron and Ethereum to the Lightning Network, potentially involving billions of dollars daily.”
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