Kaminari is a Bitcoin infrastructure company, providing seamless Lightning Network integration via enterprise API. This API is expertly tailored for a range of services including payment processors, gateways, cryptocurrency exchanges, wallets, and iGaming platforms to ensure streamlined and efficient transactions.
Lightning Network is not immune to a high fee environment, so in times of high fees only large custodians can afford channel and liquidity management, thus making Lightning usage mostly custodial. Indeed, non-custodial Lightning usage for retail users is not intuitive, efficient or popular at the moment as a lot of technical issues need to be solved in order to enable it. Thus, we can say that Lightning Network's product market fit is transfers between custodians at the moment.
While not all cryptocurrency exchanges disclose customer data, the participation of industry leaders like Binance, OKX, Kraken, Bitstamp, Bitmart etc., in the Lightning Network ecosystem demonstrates a strong trust in its technology and its potential to enhance customer experiences.
We have grouped Multichain wallets based on their potential for Lightning Network integration. Those with Bitcoin blockchain are more likely to integrate Lightning than those without it.
The number of Lightning Network transactions in August 2023 was at least 6.6 million [2], equalling $78.2 million in dollar terms. In comparison, the number of transactions on Bitcoin during the same period was 14.14 million with a total value in excess of $224.87 billion.
The gaming and gambling sector has a massive user base and thus, is a promising niche for expanding Lightning adoption. Almost 50% of crypto owners indicated that they are ready to spend their crypto assets on gambling and online Gaming [16].
In this report, we have examined the available data and propose the following:
- Lightning Network’s base of potential users will reach 420 million in 2024.
- The adoption of Lightning Network by crypto exchanges has resulted in a significant increase in Lightning’s potential user base. This trend is likely to continue by custodians - exchanges follow the lead of industry leaders like Binance and OKX.
- An increasing number of crypto wallets are integrating, including 2 of the 10 most popular wallets in the industry (Exodus, and BitPay). Similar to dynamics affecting exchanges, we believe more wallets will continue to integrate LN.
- The Bitcoin network as a whole continues to grow and show strength, with a record number of transactions being recorded in 2023. Similarly, the Lightning Network itself continues to grow in both node count and capacity.
- At present, the Lightning Network is most effective for transactions between large custodians, as non-custodial users face challenges and higher costs in managing it, particularly in environments with elevated fees.
- Cryptocurrency use in online gambling and gaming is growing at a rapid pace, and will continue to do so. Since Bitcoin is the most popular crypto used for these purposes, and the majority of the deposits to these sites are in amounts less than $50, we conclude that the Lightning Network will be increasingly adopted by igaming sites to offer users a fast and cost-efficient method to deposit cryptocurrency.
- RGB, the client-side validated state and smart contract system being built for Bitcoin, will bring stablecoins to both Bitcoin and the Lightning Network. 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.
- In summary, the available evidence suggests that Lightning Network will continue to expand at a rapid pace in 2024 and beyond, offering opportunity to those who can build and utilize innovative solutions within the ecosystem.