Binance has announced its intention of implementing 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 stuck as a consequence of high transaction fees.
Binance Announces It Is Working on Implementing Lightning Network Withdrawals
Leading cryptocurrency exchange Binance has recently announced it is working to integrate 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, having more than 450,000 transactions pending with fees of $13 dollars at the time of writing, 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 when experiencing this kind of congestion. Binance announced that, besides starting to work on this implementation, it would adjust its withdrawal fees to avoid facing this issue in the future and that it would continue to monitor the situation, adjusting fees accordingly.
Also, Binance 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.
Shortly after, bitcoin withdrawals were reopened only to be suspended once again due to “the large volume of pending transactions” the exchange had. This situation prompted the diffusion of messages regarding large outflows coming from the directions associated with Binance. Changpeng ‘CZ’ Zhao, CEO of Binance, dismissed 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 were mistakenly identifying the wallets of the exchange as belonging to others.
What do you think about Binance’s announcement of the implementation of the Lightning Network for withdrawals? Tell us in the comments section below.
