Following through on its promise in May, crypto exchange giant Binance confirmed on Tuesday that it has begun running multiple nodes on Bitcoin’s lightning network.
The exchange plans to leverage the layer-2 scaling solution to enable cheaper Bitcoin (BTC) deposits and withdrawals on its platform.
- Binance resolved to integrate lightning after an explosion in memecoin / Ordinals popularity on Bitcoin in May, which triggered major blockchain congestion and drove up transaction fees by over 1000%.
- The event interfered with exchanges like Binance attempting to satisfy users’ deposit and withdrawal requests, prompting the exchange to briefly suspend BTC withdrawals on May 7.
- In response, the firm increased the transaction fee it attached to Bitcoin withdrawals (to ensure they’d be processed faster by miners) and assured followers that lightning network withdrawals were in the works.
- “Some eagle-eyed users spotted our new lightning nodes recently. Yes – that’s us,” tweeted Binance on Tuesday. “There’s still more tech work to be done. We’ll update once Lightning is fully integrated.”
- Lightning nodes allow Bitcoin users to instantly transfer funds among themselves using network channels, at virtually no cost. Users can choose to close their channels later and settle their payments on Bitcoin’s main blockchain, effectively baking many transactions into one.
- Tether CTO Paolo Ardoinio praised the move, while popular Bitcoiner ODELL noted that large lightning channels between major exchanges have a “clear product market fit.”
- Other exchanges including Bitfinex and Kraken have already integrated the lightning network for deposits and withdrawals.
- Software intelligence firm MicroStrategy announced in May that it would bring a Bitcoin wallet with a lightning address to its corporate account holders this year.
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