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This week, the Lightning Network set a new record for the dollar value held in its payment channels at $12.6 million, according to data shared by Bitcoin Visuals[2].
This metric is also known as the total value locked (TVL) in Bitcoin’s second layer payments solution and demonstrates the amount of money that users have moved into the channels, which let them quickly and efficiently transmit value to one another, before balances are settled and confirmed on the Bitcoin blockchain.
The factors that led to the new record are fairly easy to detect. For one, the price of BTC has risen by approximately 3x since a low in March 2020. (So, a more earnest metric for TVL might be the fact that 1,060 BTC are locked in payment channels, which is close to the record of 1,104.676 BTC set on May 9, 2019. After all, 1 BTC is always worth 1 BTC.) For another, LND started supporting wumbo channels last month, which allows users to deposit more money into Lightning Network channels and send larger transactions.
Quick Digression Into Wumbo
Wumbo channels, which are named after a line of dialogue from SpongeBob SquarePants, remove a limit on the amount of BTC that can be held in a channel (capped at 0.16 BTC) and a cap on how large individual payments can be, which was capped because of the relative novelty of the Lightning Network. For a payment channel to circumvent the caps via wumbo, users on both sides must signal their desire.
“If both sides of a new channel agree to wumbo each other by setting ‘option_i_wumbo_you_wumbo,’ they can build channels with
