Bitcoin’s Lightning Network surpasses 25,000 active nodes for the first time. The Layer-2 product enables users to speed up transaction times and cut fees, driving the mainstream adoption of Bitcoin. During the past 30 days, the number of active nodes has risen 8% to 25,010.
As the solution to Bitcoin’s scalability problem, Lightning Network settles transactions “off-chain,” through a network of channels and nodes. Users need only record their BTC transactions via Lightning Network, and then settle using a single Bitcoin transaction at the end of a set period. The design cuts down the transaction time and fees, allowing for millions of transactions to be made in a matter of seconds.
A node is a “user” of the network that is to keep a copy of the Bitcoin blockchain, and verify the transactions. Users on the Lightning Network can set up nodes, which send payments via the quickest routes between parties. This can reduce congestion on the Bitcoin blockchain. A node operator will pick up a small fee for each transaction. Also, nodes on the Lightning Network can be set up by individuals and financial institutions.
Bitcoin’s Lightning Network has surpassed 25,000 active nodes for the first time. The increase in the number of nodes and channels means that there are more payment connections between the nodes. This can greatly reduce the transaction fees.
However, not every node operates a payment channel. The number of nodes with channels is 14,419, or about 58% of all nodes. For those who open and fund (about 0.035 BTC) a Lightning Network channel, there is the potential to earn a yield.
Earning Yield on Bitcoin Lightning Network
Lately, layer-2 products like Lightning Network receive the attention of big names in crypto like Twitter and Square CEO Jack Dorsey. This June, the long-time Bitcoin advocate suggests Twitter is likely to integrate the Lightning Network to accommodate Bitcoin transactions.
Dorsey’s company Square is considering making a hardware wallet, and launching a DeFi platform for Bitcoin. The project, under Square’s Cash App, will enable DeFi services for Bitcoin.
However, Ethereum’s co-founder Vitalik Buterin has cast doubt on Dorsey’s DeFi Bitcoin business. Bitcoin doesn’t have the functionality to power such a project since it is a “currency of the house.”
“On Ethereum, there’s native functionality that allows you to essentially directly put ETH or Ethereum-based assets into these smart contracts, into these lock-boxes, where there’s then arbitrary conditions that can govern how those assets get released.”
Jack Dorsey would have to create his own system that enforces those rules, says Buterin. And this will end up being something with a “much weaker trust model.”
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