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LN adoption/capacity cannot possibly explain the reduction in Bitcoin congestion. At its peak, there was only $200 million worth of BTC as collateral in LN cha

LN adoption/capacity cannot possibly explain the reduction in Bitcoin congestion. At its peak, there was only $200 million worth of BTC as collateral in LN channels: https://www.defipulse.com/address-tag/lightning-network https://www.defipulse.com/address-tag/lightning-network This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC. The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.

kevinak 4y ago
It’s worth pointing out that you can only see public channels on these trackers. Large players probably have large private channels open with each other to guarantee better payment flows and less fees. Expedia, Steam and Microsoft not a likely reason cobnest ion got lowered. More likely exchanges and large players got better at handling their wallets.
- ETH_start 4y ago
  The public LN channels define the routable space of the network, since a routing table is public by definition. The collateral in these channels is therefore a fair proxy for the overall size and usage of the LN.
TrapLord_Rhodo 4y ago
Market Cap and volume don't need to correlate. Your line of reasoning is a red herring. BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are. With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.
- ETH_start 4y ago
  >>and those LN could be responsible for an inordinant amount of volume Theoretically yes, in practice no. Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases. Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral. For these reasons, low collateral reliably maps to low usage.
  - TrapLord_Rhodo 4y ago
    >Theoretically yes, in practice no. ...? 1.) I have a direct disincentive to include more collateral than would be absolutely required. 2.) Most of the time LN's only need to go one way. 3.) The only thing your original graph shows is that the price of bitcoin has fallen. 4.) I anecedotely know there has been more use in LN among all my crypto friends and in South/ central America where i have seen increased use in Cafe's and hotels. 5.) The total amount of BTC being used as collateral in LN has grown. (Even though this means absolutely nothing and your graph of 'TVL' Also means nothing when compared is USD). 6.) It's annoying to see someone spitting FUD on BTC/ LN with ETH in their name.
    - ETH_start 4y ago
      1. My point is about how much collateral is required for a given amount of usage. 2. LN transactions going one way makes the collateral situation worse, by preventing collateral from being replenished by counter-flow transactions. 3. It shows how little value is locked in LN channels relative to value of BTC outstanding. The rest of your points are either not relevant or have already been addressed.

kevinak 4y ago

It’s worth pointing out that you can only see public channels on these trackers. Large players probably have large private channels open with each other to guarantee better payment flows and less fees. Expedia, Steam and Microsoft not a likely reason cobnest ion got lowered. More likely exchanges and large players got better at handling their wallets.

ETH_start 4y ago
The public LN channels define the routable space of the network, since a routing table is public by definition. The collateral in these channels is therefore a fair proxy for the overall size and usage of the LN.

TrapLord_Rhodo 4y ago

Market Cap and volume don't need to correlate. Your line of reasoning is a red herring. BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are. With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.

ETH_start 4y ago
>>and those LN could be responsible for an inordinant amount of volume Theoretically yes, in practice no. Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases. Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral. For these reasons, low collateral reliably maps to low usage.
- TrapLord_Rhodo 4y ago
  >Theoretically yes, in practice no. ...? 1.) I have a direct disincentive to include more collateral than would be absolutely required. 2.) Most of the time LN's only need to go one way. 3.) The only thing your original graph shows is that the price of bitcoin has fallen. 4.) I anecedotely know there has been more use in LN among all my crypto friends and in South/ central America where i have seen increased use in Cafe's and hotels. 5.) The total amount of BTC being used as collateral in LN has grown. (Even though this means absolutely nothing and your graph of 'TVL' Also means nothing when compared is USD). 6.) It's annoying to see someone spitting FUD on BTC/ LN with ETH in their name.
  - ETH_start 4y ago
    1. My point is about how much collateral is required for a given amount of usage. 2. LN transactions going one way makes the collateral situation worse, by preventing collateral from being replenished by counter-flow transactions. 3. It shows how little value is locked in LN channels relative to value of BTC outstanding. The rest of your points are either not relevant or have already been addressed.