Bitcoin’s Lightning Network (LN) capacity recently surpassed an all-time high of 5,000 BTC. 

The Lightning Network is a neutral protocol built on top of Bitcoin and currently it does not have a “native” token attached to it like many decentralized finance platforms.

Although the Lightning Network’s total liquidity is less than 0.5% of the ETH in DeFi contracts, the uptrend in Bitcoin’s LN capacity versus a downtrend in the amount of ETH locked in smart contracts is encouraging for LN development.

While the liquidity on the LN has been rising consistently, the number of channels on the peer-to-peer network dropped drastically in November following the FTX collapse. It could be due to an exodus of miners operating LN nodes besides running mining clients.

However, the likely end of miner capitulation and the rise of Bitcoin-based applications like NFTs could mark an end to LN channel capitulation. Since the start of 2023, over 2,000 new channels have been added to the network.