Does Lightning Network drive meaningful base chain usage?
Public channels account for ~0.1% of Blockspace usage, plus some Blockchain spelunking
We’ve all been watching the Lightning Network channel count shoot up in a glorious hockeystick throughout 2021:
Watching these charts, I wanted to quantify how much Blockspace is used by all these channel opens. Bitcoin blocks contain 200-300k transactions per day, so obviously if the channel count only increases 30k over the course of a year that’s not going to put a huge dent in total Blockspace, but worth looking at nonetheless.
So here is a chart showing what portion of Bitcoin Blockspace is being used by Lightning Network public channel open/closes:
LN public channel opens and closes recently hit 0.1% of all Blockspace. It will be interesting to see if this continues to increase as LN gains traction in 2021, or if there will be another Lightning Winter as there was in 2019, when public channel capacity ramped up quickly then plateaued for two years:
Speaking of 2019, Lightning Blockspace utilization hit 0.08% peak during the 2019 Lightning surge. A huge portion of the Lightning related fees from 2019 come on one day: 04/30/19.
I dug a bit deeper and looked at the channel open transactions with the largest fees on this day:
All of these were consolidation transactions where a channel of 0.16777215 BTC (the old pre-Wumbo max channel size) was opened by an old BlueWallet node.
Bluewallet paid 680k Sats total fees to consolidate UTXOs and open 6 of these channels (I only pasted links for four because I’m lazy). Even though they paid the highest fees per transaction, most of this big 0.3BTC fee spike was actually from another even larger entity: LNBIG.
Here are the top channel open fee paying nodes on that day:
All of the top pubkeys on this list correspond to LNBIG nodes according to 1ML. LNBIG is a notorious Lightning whale that runs many nodes and put a lot of capital into Lightning Network early on.
This Blockchain spelunking was a bit of a diversion, but I had fun tying the Lightning Network public channel data back to the Blockchain. Remember that if you open public channels on your node, all this data will be available and broadcast by your node as well.