Global cryptocurrency exchange OKEx is moving to cheaper and faster Bitcoin (BTC) transactions with its upcoming Lightning Network integration.
According to a Feb. 2 announcement, OKEx’s Bitcoin Lightning Network will be integrated “in the coming quarter,” making OKEx a participant node in the Lightning Network.
The integration will allow OKEx users to select the Lightning Network option when depositing and withdrawing BTC, intending to decrease transaction fees and times.
The Lightning Network is a second-layer scaling solution and payment protocol based on top of the Bitcoin blockchain. The protocol was suggested by Joseph Poon and Thaddeus Dryja in 2015 in an effort to solve Bitcoin’s scalability problem. According to data from crypto analytics website BitInfoCharts, the average Bitcoin transaction fee amounted to more than $15 on Feb. 1.
As the Lightning Network is not a blockchain itself but rather a secondary layer, the solution was originally mostly used for small or even microtransactions Bitcoin transactions. To solve this problem, Lightning Labs introduced so-called “Wumbo” channels in August 2020 in order to make it possible for nodes to service larger transactions while reducing on-chain fees. The word Wumbo, which apparently means “large”, is a reference to an episode of SpongeBob SquarePants. These channels are so named because they are larger than the 0.1677 BTC ($5,800) limit.
OKEx is not the only crypto exchange to start experimenting with the Bitcoin Lightning Network. In July 2019, European crypto exchange Bitstamp set up its own Lightning Network node to boost the network’s capabilities. Another global exchange, Bitfinex, reportedly became the first crypto exchange to enable Lightning payments in December 2019. In September 2020, Bitfinex announced support of Lightning Network’s Wumbo channels to enable their customers to deposit and withdraw large amounts of Bitcoin.
Amid Lightning Labs expanding the Lightning Network’s capabilities, more crypto exchanges have moved to integrate the protocol in recent months. In December 2020, major United States-based crypto exchange Kraken announced that it too will integrate the Bitcoin Lightning Network in 2021. OKCoin also recently announced its plans to integrate the network in Q1 of 2021.