How come major exchanges have not yet adopted the lightning network?

[ConnerDalfino]

Mostly asked question:

How far are we along with the lightning network? What are the major milestones we need to achieve? It doesn't seem like Lightning Network wallets are very popular? Lightning is not yet integrated into most major wallets

My thoughts:

Lightning networks produce very few fees, and major exchanges depend on fees in order to make money.

The only exception is Bitaroo, a bitcoin-only exchange in Australia. They offer free lightning depositing. It works flawlessly.

What are your thoughts?

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[mocacinno]

Well, i don't think it has anything to do with fees... You shouldn't mix transaction fees with exchange fees...

If an exchange charges a withdrawal fee, they usually use part of said fee to pay the transaction fee, and they keep the rest. Nothing is stopping them from slightly lowering the withdrawal fee for LN withdrawals, so they keep the same profit margin.

Same for deposits: for deposits, 100% of the deposit fee is "profit" for the exchange (eventough, many small deposits will increase the fee they have to use to spend those funds afterwards), so nothing is stopping them from keeping said fee in place for lightning deposits.

To be honest, i have no idear why they're not adopting the LN... Maybe because it's to new, or because it would cost them a lot of money to change their code, or because they have to give extra training to the support staff, or because they don't think the network is mature enough, or because they believe some of the FUD going around, or because they think not enough open channels will exist, or because the current market share is to small, or because an on-chain transaction with loads of confirmations is still safer than a lightning transaction,... Plenty of reasons, but which one is the real one: only exchange owners can tell you...

[hugeblack]

Most exchanges haven't updated their code in a long time so unless there is a good motive forcing them to use lightning I don't think they will and I can cite several reasons why they don't:

 - Withdrawal of altcoins: One of the reasons for withdrawing altcoins is because of the cheap withdrawal fees or transaction fees. If the Lightning Network is implemented, most of the altcoins will be inside the platform and will not be withdrawn.
 - Channel Closing Fees: The Lightning Network is good for those who want to make small and frequent payments other than what happens on the platforms (large and rarely daily payments)
 - More effort, less return.

[Bitcoin_Arena]

Why would they bother adopting lightning network which could "Kill their huge profits" they earn from the flat withdrawal fees each person trying to withdraw has to pay?

It took ages for some exchange to just adopt SegWit which was less technical and easier to implement. It's a shame many big exchanges haven't even bothered to adopt Segwit. You would think they would care since Segwit would help them spend less on fees while trying to send so many inputs to maybe a cold wallet but they don't. Why? Because you, the customer will foot the bill anyway via paying 10 times the normal network fees.

The sad truth is most exchanges don't care about the development of Bitcoin. All they care about are the huge profits the rake from every pocket.

[dkbit98]

I think there are already some big exchanges that support Lightning Network like  Bitfinex, Bitstamp, OKCoin and Kraken exchange said they will integrate LN later this year.

More exchanges will probably follow soon, but Lightning Network is not nearly as popular as main chain, despite the fact that stats is showing that usage is growing all the time, it is still to complicated for average users.
Problem is that most of this centralized exchanges will ask for mandatory kyc and track everything you do with all transactions.

[NeuroticFish]

Well, i don't think it has anything to do with fees... You shouldn't mix transaction fees with exchange fees...

That's correct, yet still many make this confusion.
And for exchanges it's much easier to hide their (exaggerated) withdrawal fees by using on-chain transactions and telling it's the tx fee...