tl;dr
Bitcoin’s Lightning Network capacity decreased by about 20% from over 5,400 BTC in late 2023 to around 4,200 BTC by August 2025. This decline reflects structural changes in routing and protocol design rather than reduced adoption. Despite moderate capacity growth, routed payments surged over 1,200% ...
Bitcoin’s Lightning Network capacity has decreased from over 5,400 BTC in late 2023 to around 4,200 BTC by August 2025, marking roughly a 20% decline according to mempool.space data. Despite this apparent contraction, analysts and developers interpret the trend as a reflection of structural changes in routing and protocol design rather than a reduction in adoption.
The network’s capacity measures the total BTC locked in publicly advertised payment channels used for routing peer-to-peer transactions. However, this figure excludes private channels, custodial flows, or multi-path routed payments. River’s 2023 Lightning report highlighted that while capacity growth was moderate, routed payments surged by 1,212% between August 2021 and August 2023.
The integration of Lightning by Coinbase in 2024 contributed to increased transaction volume, and by mid-2025, Lightspark noted around 15% of Bitcoin withdrawals on its platform utilized Lightning channels. Similarly, CoinGate reported that Bitcoin’s share of crypto payments on its platform rebounded in 2025, partly driven by second-layer networks such as Lightning. Their 2024 data showed Lightning accounting for more than 16% of Bitcoin orders, up from approximately 6.5% two years earlier.
The decline in public capacity aligns with a longer-term reduction in public node and channel counts since 2022. Developers attribute this to the consolidation of routing through more efficient hub nodes and protocol advancements like channel splicing, which enables wallets to resize channels without needing on-chain transactions. These improvements reduce the necessity for new channels and optimize liquidity usage.
In addition to these structural shifts, Lightning is evolving with expanded use cases. In January 2025, Tether introduced USDt over Lightning via Taproot Assets in partnership with Lightning Labs, enabling dollar-denominated payments and stablecoin transfers without requiring BTC locked in channels. This innovation decouples usage growth from Bitcoin-denominated capacity.
Further development efforts aim to enhance payment reliability and channel health by addressing vulnerabilities like jamming attacks and replacement cycling. New features such as BOLT12 Offers and liquidity automation tools improve the network’s robustness for commercial applications.
The application layer of Lightning is also broadening. For instance, the L402 specification enables pay-per-request APIs with Lightning-native authentication and micropayments, now used in AI agent frameworks like LangChainBitcoin. This model supports automated machine-to-machine payments without fiat accounts or static keys, providing scalable payment flows that do not depend on capacity increases.
Overall, these protocol enhancements and novel use cases suggest that public capacity alone does not fully capture Lightning Network’s adoption and growth. Developers emphasize that current progress prioritizes maximizing the utility of existing liquidity rather than merely expanding visible capacity. Although public capacity metrics show a downward trend, underlying data on network usage, platform integration, and technological advancements present a more optimistic and dynamic picture of Lightning’s trajectory.