"There’s a bunch of room to grow non-custodial Lightning and on-chain activity on Bitcoin now — for Lightning, something like 10x should be plausible, but likely also 2x growth (or more) for everything else, perhaps more if there are also technology/efficiency improvements deployed. So PTLCs, eltoo, channel factories, OP_VAULT, silent payments, payjoins, etc would all fit in here.

But the headroom there isn’t unlimited — expect it to show up as fee pressure and backlogs and less ability to quickly resolve transaction storms. And that will in turn make it hard and expensive for people with small stacks to continue to do self-custody on the main chain. At that point, acquiring new high value users means pricing out existing low value users.

Moving those users onto cheaper chains that can only deal in BTC IOUs kind of sucks, but it’s better than the alternatives: either having them use something worse still, or nobody being able to verify that the big players are still following the rules.

Perhaps one way to think of this is as the gentrification of the Bitcoin blockchain; with the plebs and bohemians forced to move to new neighbourhoods and create new and thriving art scenes there? If so, a key difference between real estate gentrification is that in this analogy, moving out in this sense is a way of defending the existing characteristics of the neighbourhood, rather than abandoning it to the whims of corporatism. And, of course, the Bitcoin itself always remains in Bitcoin’s utxo set, even if its day to day activity is recorded elsewhere. But in any event, that’s a tomorrow problem, not a today problem."