🚰Liquidity

Liquidity is stored in channels. Creating a channel to the network not only enables you to transact with others but also connects you to a much larger community. 🌐 By setting up a channel, you're not just operating a node; you become an integral part of the expansive network of Lightning nodes. This is your entry into a vibrant community where every member plays a crucial role. Welcome aboard! ⚡

What is Liquidity?

Inbound Liquidity or receiving capacity: This is the amount you can receive via the Lightning Network. More inbound liquidity allows you to accept larger or more payments smoothly.

Outbound Liquidity or spending balance: This is the amount you can send across the network. Increasing your outbound liquidity lets you send more substantial or more frequent payments.

Why is Liquidity Important?

Liquidity is a property of a Channel. It can only be obtained by other lightning network nodes having channels opened to you or by opening channels to other lightning network nodes. Liquidity is vital for the operation of the Lightning Network. Proper liquidity management ensures you can always send and receive payments promptly, avoiding any operational hitches.

How to properly manage your Liquidity?

Opening new channels will increase your spending balance and enable you to send funds across the lighting network. Follow-on to open a new channel.

Maintaining channels with liquidity on the remote end of your channel increases your receiving capacity. This is crucial to ensure you can always receive a payment.

While it might sound technical, managing liquidity is just about making sure your node can handle your transaction needs. Think of it as ensuring there's enough fuel in your car for a long trip and adjusting as needed. 🚗