Why a 20% Drop in Lightning Network Capacity by 2025 Isn’t as Detrimental as It Seems

The capacity of Bitcoin’s Lightning Network has decreased from over 5,400 BTC in late 2023 to approximately 4,200 BTC by August 2025, marking a nearly 20% reduction, according to data from mempool.space. Although the raw statistics suggest a contraction, analysts and developers indicate that this change represents a structural evolution in routing and protocol design, rather than a decline in adoption.

Lightning capacity vs usage

The capacity metric of the network pertains to the total volume of BTC secured in publicly advertised payment channels, which constitute the graph utilized for routing peer-to-peer transactions.

As outlined in River’s 2023 Lightning report, this figure does not account for private channels, custodial flows, or payments routed through multiple paths. The same report revealed that despite only modest growth in capacity during that period, routed payments on Lightning surged by 1,212% from August 2021 to August 2023.

The integration of Lightning by Coinbase in 2024 resulted in significant transaction volume. By mid-2025, Lightspark reported that around 15% of Bitcoin withdrawals on its platform were now processed via Lightning.

CoinGate, a European cryptocurrency payment processor, has also indicated that Bitcoin’s proportion of crypto payments on its platform regained its leading position in 2025, with internal data attributing part of that volume to the increasing utilization of second-layer networks, including Lightning. In its 2024 quarterly analysis, CoinGate noted that Lightning had already comprised over 16% of all Bitcoin orders, up from about 6.5% two years prior.

The decrease in public capacity coincides with a long-term decline in the number of public nodes and channels, which have been consistently decreasing since 2022, according to mempool.space data.

Lightning capacity (Source: mempool.space)

Developers attribute part of this trend to the consolidation of routing through more efficiently managed hub nodes and the adoption of protocol improvements such as channel splicing. These advancements enable wallets to adjust channel sizes without requiring on-chain transactions, diminishing the necessity for new channels and facilitating more efficient liquidity usage.

Continued Lightning development

Although the public graph may seem smaller, recent advancements might be broadening the network’s use cases. In January 2025, Tether announced the launch of USDt over Lightning through Taproot Assets, in partnership with Lightning Labs.

This development paves the way for dollar-denominated payments and stablecoin-backed remittances on the network, which would not necessitate BTC being locked in channels, effectively decoupling usage from Bitcoin-denominated capacity metrics. Lightning Labs CEO Elizabeth Stark stated that the integration merges the security of Bitcoin with the speed and scalability of Lightning.

On a structural level, developers are also tackling issues that impact payment reliability and channel health. Research into jamming attacks and replacement cycling vulnerabilities is ongoing through the Bitcoin Optech working groups, while features like BOLT12 Offers and liquidity automation tools are enhancing Lightning’s robustness for commercial applications.

There is also a noticeable growth in application layers utilizing the Lightning protocol. One example is L402, a specification that enables pay-per-request APIs using Lightning-native authentication and micropayments, now implemented in early AI agent frameworks such as LangChainBitcoin.

This design permits automated agents to pay per inference call or API response without needing fiat accounts or static keys, creating a new machine-to-machine payment stream that does not depend on capacity growth for scalability.

These shifts in protocol and use cases provide context for why public capacity alone may no longer serve as a complete indicator of the network’s adoption trajectory.

Developers contend that Lightning’s current evolution is less focused on expanding visible liquidity and more on enhancing the utility of each satoshi already in circulation.

While the public capacity trend may be downward, the underlying metrics regarding usage, integration, and technical advancements present a different narrative.

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