Everyone on a liquidity route in Bitcoin’s Lightning Network wants the same rebalance of funds to happen, but none of them wants to be the first person to pay.

The tenuous impasse is a classic Mexican standoff.

When this situation occurs, Lightning node operators can neither pay nor not pay first without harming themselves, so nobody moves, and nobody wins. It has been a recurring problem for years.

After almost a decade of tools and research chasing this problem, the network’s routing nodes remain locked in a standoff that quietly erodes routing reliability of bitcoin (BTC).

The Lightning Network, Bitcoin’s largest layer 2 network with no connection to an altcoin, has a structural bias toward channel depletion.

That is, money tends to flow in one direction along channels from senders toward structural receivers, such as merchants receiving BTC who deliver goods and services to customers.

Routing nodes are left with channels that are stuffed with BTC on one side and depleted of BTC on the other. A channel that cannot send in both directions is effectively half-broken for routing purposes. 

Lightning’s total capacity set a fresh all-time high of roughly 5,600 BTC in December 2025, but that surge arrived almost entirely through institutional deposits from Binance and OKX into existing channels. Year-to-date data tells a different story.

BTC capacity from December’s high above 5,600 has declined to 4,884 today, and payment channels have declined from more than 80,000 in mid-2023 to about 45,000 today, nearly halving as liquidity consolidated into lopsided channels on a shrinking graph.

The cheapest fix is the one nobody will start

René Pickhardt, one of the network’s most prolific routing researchers, wrote that most channels “are expected to be depleted over time, primarily due to selfish routing behavior within the current protocol design.”

By his accounting, any given payment link has roughly a coin-flip chance of avoiding long-term depletion.

Researchers have described the embarrassingly simple yet elusive solution. 

Presenting several nodes sitting on a circular payment path connected to one another by payment channels and all lopsided in the same direction, each could push BTC around the loop and finish a complete cycle with healthier channels as a result.

Everyone would benefit if everyone cooperated at the same time.

The problem, as with every Mexican standoff, is who pays first. 

Routing BTC over Lightning costs money. Whichever node kicks off the rebalance owes routing fees to every other hop on the loop. If they wait, other nodes can receive their rebalancing for free and pocket the fee.

Although every node operator on the ring would benefit most as a collective if they all pushed BTC around for a single sending plus a single receiving fee — i.e. for nearly free in net — each operator also has the rational choice to wait for someone else to send first so they can collect without sending.

Wait for someone else to move first. It is a Mexican standoff.

Read more: Why two-party Bitcoin Lightning channels keep failing

A graveyard of fixes for Lightning channel imbalances

The industry has thrown nearly a decade of engineering at channel imbalances without solving these types of standoffs.

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Alex Bosworth’s submarine swaps, announced in August 2018, let operators shuffle BTC between on-chain and Lightning to reload channels.

It helped a bit, but every swap burned a real BTC transaction fee, so adoption didn’t pick up enough to solve many of the network’s recurring Mexican standoffs.

Lightning Labs packaged the idea into Loop and, later, into Lightning Pool, a non-custodial marketplace for inbound channels since at least November 2020.

Lightning Pool activity declined within roughly a year, and the product faded from the ecosystem. 

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Core Lightning’s Liquidity Ads, the closest protocol-native alternative, sees fulfillment that one recent analysis described as sporadic at best.

Amboss Technologies launched Magma in April 2022 to let operators buy and sell inbound liquidity peer-to-peer. Other rebalancing scripts like C-Otto’s rebalance-lnd and Bosworth’s Balance of Satoshis let operators pay themselves through loops when fees permit.

A new proposal this week aims to encourage cooperation at a protocol level.

A perennial problem with Lightning

None of those efforts have prevented standoffs from recurring.

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Protos has previously documented Pickhardt’s argument that depletion is a structural property of the two-party channel itself, not an operational hiccup. 

His January 2026 paper identified three possible mitigations: symmetric fees per direction, convex or tiered fees, and coordinated replenishment.

The first two require fee structures most routing nodes would reject outright. The third requires somebody to volunteer to coordinate.

Coordination is where Lightning keeps getting stuck. The protocol is supposed to work with nodes routing selfishly without trusting each other.

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When channels become lopsided, however, fixing the network’s most persistent liquidity problem requires exactly the type of coordination the protocol was built to avoid.

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• XRP price held support near $1.40 and could eye a retest of $1.50.
• Bitcoin and Ethereum continued to dictate sentiment.
• Cryptocurrencies are showing upside potential despite geopolitical headwinds.

XRP is positioning for a crucial retest of the $1.50 resistance level, buoyed by broader upside signals across the cryptocurrency market.

As Bitcoin stabilizes above $78,000 and Ethereum holds near $2,300, XRP’s price around $1.40 reflects relative stability in today’s trading.

BTC and ETH holding current levels could help reinvigorate capital flows, with top altcoins likely to follow despite ongoing geopolitical uncertainties.

XRP price holds support

As noted, XRP held above key support at $1.40 on Thursday, with a slight uptick to intraday highs signaling a potential move back toward $1.50.

While prices were down about 1.8% at the time of writing, trading volume had also declined by 11%, suggesting bulls are absorbing selling pressure rather than capitulating.

XRP climbed to highs of $1.45, showing resilience as Bitcoin reclaimed $78,600 and Ethereum touched $2,350.

Cryptocurrencies have broadly held key levels despite geopolitical headwinds, including tensions in the Middle East.

“This month’s sustained rebound reflects capital inflows. If macroeconomic pressures bottom out by mid-year, Bitcoin’s bottom will also be confirmed,” analysts at Greekslive wrote on X.

On-chain data points to reduced selling pressure, with whale accumulation increasing in recent weeks. This stability suggests buyers are regrouping and could challenge overhead resistance if momentum continues.

XRP price outlook

XRP’s broader outlook remains tied to movements across risk assets, including recent outflows from crypto ETFs.

Macro factors—such as Federal Reserve hawkishness and equity market pullbacks—could amplify downside risks. If Bitcoin weakens, XRP is likely to follow.

Lingering geopolitical uncertainty, including limited progress from the US-Iran ceasefire, could further weigh on sentiment.

That said, institutional and retail interest remains supportive. Ripple’s ongoing partnerships and expansion in payments adoption continue to underpin fundamentals.

Despite delays in a spot XRP ETF launch, analysts believe Ripple could still attract sustained capital inflows.

Technical setup signals breakout potential

From a technical perspective, a potential cup-and-handle pattern is forming on the daily chart.

The “cup” base developed between $1.10 and $1.65 over the past month, with the handle consolidating in the $1.40–$1.50 range.

A decisive breakout above $1.50 could open the path toward $1.80. However, XRP has struggled to regain momentum after falling below the $2.00 level.

Failure to break resistance may see the token revisit lower support levels around $1.30 or even $1.20, last seen in early April.

Going forward, investors are likely to watch macroeconomic data and geopolitical developments closely for direction.

 

TLDR

• Bitmine staked about $320 million worth of ETH within 24 hours through Coinbase Prime.
• The company now generates yield on more than 70% of its total ether holdings.
• Onchain data shows Bitmine has staked roughly 3.5 million ETH valued at about $8.1 billion.
• Reports indicate that Bitmine may hold up to 5.08 million ETH if recent wallet transfers are confirmed.
• Bitmine controls over 4.1% of the total ether supply and targets 5%.

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Bitmine expanded its Ethereum staking position after moving about $320 million worth of ETH within 24 hours. The company now generates yield on more than 70% of its total ether reserves. Onchain trackers reported fresh transfers to Coinbase Prime as Ethereum traded at $2,317 on Thursday.

Bitmine increases Ethereum Staking Allocation Through Coinbase Prime

Bitmine transferred about 75,600 ETH to Coinbase Prime for staking on Thursday morning. Onchain data from Arkham Intelligence recorded the transaction. The move followed a separate transfer of more than 61,200 ETH on Wednesday.

Blockchain analytics platform Lookonchain flagged the transactions in a public update. It stated that Bitmine has now staked around 3.5 million ETH. That amount equals roughly $8.1 billion and represents about 70.1% of its overall holdings.

Lookonchain also reported that three new wallets likely tied to Bitmine received 100,000 ETH. The tokens carried an estimated value of $234 million before Thursday’s staking activity. Bitmine has not yet confirmed ownership of those wallets.

If confirmed, Bitmine would hold about 5.08 million ETH in total. That level would extend its lead over SharpLink. SharpLink currently holds about 868,699 ETH.

As a result, Bitmine controls more than 4.1% of the total ether supply. The firm has stated a target of reaching 5% of supply. Recent purchases align with that objective.

On Monday, The Block reported that Bitmine bought over 100,000 ETH in the prior week. Chairman Tom Lee said he sees ether in the “final stages of the ‘mini-crypto winter.’” He commented while discussing the firm’s acquisition strategy.

Ethereum Price Declines as Bitmine Advances Treasury Strategy

Ethereum traded at $2,317 on Thursday, reflecting a 3.5% daily decline. The token ranked as the largest loser among the top 20 cryptocurrencies by market value. The broader crypto market also showed weakness during the session.

In March, Bitmine announced plans to migrate its ether treasury to MAVAN. The company launched MAVAN as its in-house staking platform last month. However, recent staking allocations continue to move through Coinbase Prime.

Bitmine has projected nearly $300 million in annual staking rewards once it completes the migration. The estimate relies on a 2.83% seven-day staking yield. The company has not provided a timeline for full migration.

Bitmine’s stock, trading under BMNR, has declined over the past six months. Shares traded near $22 on Thursday. The price reflects a 55% drop since October.

BMNR has tracked Ether’s roughly 50% decline during the broader crypto market drawdown. The company continues to expand its ether holdings despite market pressure. Its latest transfers mark the most recent treasury update.

Web3 gaming burned through up to $15 billion chasing a token-driven future that gamers never bought into.

Data from Caladan, a market-making and trading firm, shows roughly 93% of so-called GameFi projects are now effectively dead, with token values down about 95% from their 2022 peaks and funding to studios collapsing 93% by 2025.

Investors and studios poured billions into tokens and non-fungible tokens (NFTs) before building blockchain-based games containing tradable properties. Then capital shifted into AI, asset tokenization and infrastructure, and more than 300 games shut down, turning Web3 gaming into a cautionary tale about chasing speculation over product-market fit.

“Capital was destroyed at every layer simultaneously,” the report states, pointing to venture capital, retail NFT buyers, gaming guilds and Telegram’s 300-million-user tap-to-earn wave as parallel casualties. Hamster Kombat alone lost 96% of its users within six months of launch. YGG, the flagship gaming-guild token, trades 99.6% below its November 2021 peak.

Individual post-mortems are brutal. Pixelmon raised $70 million in a 2022 NFT mint and, four years on, still has no public game. Ember Sword burned through $18 million over seven years of development before shutting down last May with no refunds. Gala Games is embroiled in a lawsuit alleging its co-founder diverted $130 million in tokens. Square Enix quietly wound down its Symbiogenesis experiment last July.

Structural mismatch

The failure wasn’t just a bad cycle or weak execution. The data indicate it was a structural mismatch between a model built around financial incentives and an audience that consistently signaled it wanted entertainment instead.

At the heart of the boom was GameFi, the play-to-earn model that turned gameplay into a financial feedback loop.

Players bought tokens or NFTs, earned rewards in those same assets, and cashed in as long as newcomers kept piling in. Once the inflows slowed, the math broke down. Token prices slumped, rewards thinned out, and users walked away — dragging entire in-game economies down with them.

Axie Infinity, the sector’s one-time flagship, watched daily active users crater from roughly 2.7 million at the peak to around 5,500 today, according to DappRadar data.

The demand side never caught up with the flood of capital. Even at the height of the mania, just 12% of gamers had tried a crypto game, according to a Coda Labs survey, cited by Caladan.

Capital allocation made the problem worse. Studios raised tens or hundreds of millions of dollars before shipping viable products, removing the pressure to build games that could retain players.

The most telling data point may be where the money went instead. Gaming commanded 62.5% of all Web3 venture investment in 2022; by 2025, its share had collapsed to single digits as AI, real-world-asset tokenization and layer-2 infrastructure absorbed the displaced capital.

Even Animoca Brands, the sector’s most prolific backer, has cut gaming to roughly 25% of its portfolio and is pivoting to stablecoins, RWAs and AI.

At the same time, development timelines stretched three to five years, while tokens traded in real time and demanded constant momentum. By the time many projects were ready to launch, their associated tokens had already collapsed.

The result is a sector that expanded rapidly on speculative demand and contracted just as quickly when that demand faded. More than 300 blockchain games have shut down, according to DappRadar, and remaining investment has shifted away from titles toward infrastructure.

What was once pitched as the future of gaming now looks more like a cautionary example of what happens when financial engineering runs ahead of product market fit.

More than 120 entities affiliated with the cryptocurrency and blockchain industry are urging US lawmakers to stop stalling on the advancement of a digital asset market structure bill.

In a Thursday letter to leaders in the US Senate Banking Committee, the Crypto Council for Innovation (CCI) and Blockchain Association said that the body should “proceed towards a markup of the CLARITY Act to provide a comprehensive federal market structure framework for digital assets.”

The legislation, expected to be one of the most significant laws to potentially impact the industry crypto, passed the House of Representatives in July 2025 but has been delayed due in part to government shutdowns and debates over stablecoin yield and other issues.

“Timely action is critical, as other major jurisdictions have already implemented comprehensive frameworks, and the absence of comparable US policy risks ceding both economic and strategic advantages,” said the letter. “The US needs a comprehensive market structure framework to support domestic digital asset innovation, or risk migration of investment, jobs, and technological development offshore.”

Source: CCI

The Senate Banking Committee, under chair Tim Scott, postponed a markup on the CLARITY Act in January hours after Coinbase CEO Brian Armstrong said that the company could not support the bill as written. Since that time, representatives from the banking and crypto industries have met with lawmakers to discuss issues within the bill — e.g. how to address stablecoin yield — and possible paths forward. 

As of Thursday, the banking committee had not publicly announced a new date for the bill’s markup. However, US Senator Thom Tillis on Monday called for committee leaders to consider postponing any markup until May to give crypto and banking representatives more time to discuss a compromise on stablecoin yield.

Related: Four reasons why the crypto market is rallying today: Will bulls maintain control?

About 120 crypto companies and organizations signed onto the letter, including exchanges like Coinbase and Kraken, but also groups like the Texas Blockchain Council and Solana Policy Institute. It came just three days after the advocacy organization The Digital Chamber asked the banking committee to schedule a markup “as soon as the calendar allows”:

“We are now more than halfway through the 119th Congress, and it has been more than 270 days since the House passed the CLARITY Act with strong bipartisan support and we recognize the legislative window for this Congress is narrowing.”

Banking association asks for more, not less, time to address stablecoins

On Tuesday, the American Bankers Association asked four US government agencies responsible for GENIUS regulations for 60 additional days to comment after the Office of the Comptroller of the Currency finalized its rules. The request, if granted, would likely delay full implementation of the stablecoin bill.

Magazine: AI-driven hacks threaten to kill DeFi — unless projects act now

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