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Binance has announced its intention to implement the Lightning Network, a layer 2 Bitcoin scaling protocol, on its platform after experiencing an episode of congestion regarding withdrawals on the Bitcoin network. The exchange had to pause bitcoin withdrawals twice due to a large backlog of operations that were stuck due to high transaction fees.
Leading cryptocurrency exchange Binance has recently announced that it is working to integrate the Lightning Network, a bitcoin-based scaling solution, into its platform. The exchange made the announcement after having to pause bitcoin withdrawals twice in a single day due to network congestion.
The congestion issue Binance referred to had to do with the rise of BRC-20 tokens, which are issued on top of the Bitcoin blockchain, and have overwhelmed the BTC mempool, with more than 450,000 transactions pending with fees of $13 at the time of writing , according to blockchain data.
The implementation of Lightning Network withdrawals will allow users to have the ability to bypass the high fees collected by the BTC network when experiencing this type of congestion. Binance announced that, in addition to starting work on this implementation, it will adjust its withdrawal fees to avoid facing this issue in the future, and that it will continue to monitor the situation and adjust its fees accordingly.
Also Binance tired:
This is a learning opportunity for us and we will do our best to prevent this from happening again.
On 7 May, the stock exchange put on pause BTC withdrawals for the first time, saying it “experienced a congestion issue” and that the Binance team was “currently working on a solution until the network is stabilized” and promised to reopen withdrawals as soon as possible.
Shortly after, bitcoin withdrawals were reopened just to be suspended once again due to the “large volume of pending transactions” the exchange had. This situation led to the spread of reports of large outflows coming from the directions associated with Binance. Changpeng ‘CZ’ Zhao, CEO of Binance, rejected these 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 falsely identified the exchange’s wallets as belonging to others.
What do you think of Binance’s announcement of the implementation of the Lightning Network for withdrawals? Tell us in the comments section below.
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