Lightning Network to Address Withdrawal Congestion Issues

Lightning Network to Address Withdrawal Congestion Issues

Binance has announced that it was working on implementing Lightning Network, a layer 2 Bitcoin scaling protocol, on its platform to address withdrawal congestion issues on the Bitcoin network. The exchange paused Bitcoin withdrawals twice during a day due to a large backlog of operations resulting from high transaction fees.

Bitcoin-Based Layer 2 Scaling Solution

Global cryptocurrency exchange Binance has announced it is working on integrating Lightning Network, a Bitcoin-based scaling solution, into its platform. The exchange announced stopping Bitcoin withdrawals twice in a single day due to network congestion.

The congestion issue has been credited with the rise of BRC-20 tokens, which are issued on top of the Bitcoin blockchain, and has overwhelmed the BTC mempool with more than 450,000 pending transactions and fees of USD 13, according to blockchain data.

The implementation of Lightning Network withdrawals would allow users to have the option of sidestepping the high fees collected by the BTC network during congestion. Binance has announced that it is working on the implementation and adjusting withdrawal fees to avoid facing the issue in the future by consistently monitoring the situation.

Binance further stated:

"This is a learning opportunity for us, and we’ll do our best to prevent this from happening again."

Addressing BTC Outflow Rumors

On May 7, the exchange paused BTC withdrawals for the first time, stating that it was "experiencing a congestion issue" and that the Binance team was "currently working on a fix until the network is stabilized," vowing to reopen withdrawals as soon as possible.

Large Volume of Pending Transactions

Bitcoin withdrawals were reopened shortly before being suspended again due to "the large volume of pending transactions" on the exchange. The situation prompted widespread rumors regarding large outflows associated with Binance. However, Changpeng Zhao, CEO of Binance, dismissed the reports as FUD on social media.

Binance clarified that the outflows were "actually movements between Binance hot and cold wallets due to the BTC address adjustments" and that the reports were mistakenly identifying the wallets of the exchange as belonging to others.

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