Binance users will join the Lightning Network community as the exchange announced plans to integrate the second layer protocol in the coming weeks. The upgrade will provide Binance’s millions of users with faster withdrawals and lower costs. The decision to integrate the Lighting Network falls in line with other major exchanges seeking to remain competitive.
The Binance Lighting Network integration comes on the heels of multiple +3-hour withdrawal pauses. The pauses caused users to panic before the company reassured clients everything was alright. According to the platform, network congestion and a large number of pending transactions were to blame for the delays.
Binance Resubmits Transactions with Higher Fees
The pause in withdrawals was necessary as the exchange wanted to resend the transactions with higher fees to speed up their processing. In the Bitcoin network, pending transactions list in the mempool for miners to add to their blocks. The problem with his approach is that very low fee transactions can build up.
The pause resulted in Binance having its largest withdrawal day since its inception. Over 162,000 BTC were withdrawn from the platform recently, which has put a strain on the network and the exchange. Much of these withdrawals were the result of users remaining jumpy following the FTX collapse. The FTX collapse was one of the largest in recent history and has set regulators into overdrive.
Binance Has a History of BTC Withdrawal Halts
As a centralized exchange, Binance handles a massive amount of BTC trading volume daily. The firm continues to have issues in this regard, as the cost of BTC transactions can be higher than other chains and the delays are longer. Binance users have taken to social media to express their concerns and worry whenever the platform pauses access to their funding.
Notably, Bitcoin's blockchain can only support 7 transactions per second on its own. As such, it's extremely slow compared to today's advanced networks. The Lightning Network brings Bitcoin in line with advanced fourth gen networks. It enables the world's first cryptocurrency to scale vertically using payment channels.
The Lighting Network Opens the Door for BTC-backed Assets
Recent developments on the Bitcoin mainnet and the Lightning Network have made it possible for developers to launch digital assets on the Bitcoin blockchain in a streamlined manner finally. This development means that Biannce may one day support other Lightning Network-powered BRC-20 tokens.
Regulators Zone in
In an interesting turn of events, the SEC recently opened a lawsuit against the exchange. According to SEC documentation, regulators allege that Binance hosted the sale of some tokens that the group considered securities. Interestingly, the SEC opened a lawsuit but didn’t choose to follow up with any criminal charges which is great news for the exchange at the moment.
Lightning Network is A Must for Exchanges Today
The market has now reached a point where users demand lower Bitcoin fees and faster transaction times. To accomplish this task and stay competitive, more CEXs are going to decide to join the LN community which will help to drive adoption further. For now, it’s a great sign for LN users when the world's largest CEX integrates the protocol into their withdrawal process.