Managing Liquidity and Lightning Node Basics

To acquire liquidity on the lightning network you first deposit Bitcoin onchain.

Then with that amount you deposited you can open channels, this becomes your liquidity - you can track and manage your channels in Lightning Node App and see in the Summary tab your Max Receive and Max Send that will correlate with how much you can send with any lightning wallets connected to your node

Please note, it’s not recommended to store significant funds on Lightning until you are very confident with the backup-recovery process and its nuances. The general rule-of-thumb is depositing what you need for immediate liquidity, Lightning is an amazing development because you only need enough capital on hand for immediate transactions - and it’s a rule-of-thumb most Bitcoiners are still storing their Bitcoin reserves in their own preferred secured wallet solution onchain…

As an example Alice and Bob want to send Lightning, they use a friends’ Lightning Node as the backend because they don’t want to rely on any big hosted providers. That Lightning Node only needs enough liquidity for sending and receiving those immediate transactions back and forth, enabling scaling solutions on Layer 2. While all of them are still storing their Bitcoin on their own Bitcoin onchain hardware wallets or a multi-sig solution on Layer 1, as an example for long-term holding or only accessing their savings when they need them. If you are storing a significant amount in any Lightning Wallet, be sure you are comfortable with its recovery process.

If you’d like to dig even deeper this is a main resource on Lightning Development: GitHub - lnbook/lnbook: Mastering the Lightning Network (LN)

You can also use your preferred Lightning Node manager application available in the App store. Lightning Node App runs by default on the LND spec created by Lightning Labs. When adding to this balance it is reflected in the applications also utilizing LND

Your Core Lightning application will have its own balance as it’s running on c-lightning/Core Lightning created by Blockstream

Here’s a nice chart the breaks down the current state of the Lightning network ecosystem circa March 2022 created by Arcane research and you can see how the lightning specifications are arranged at the top:

The landscape is still growing, updating a new breakdown chart published by River circa 2023:

Here is a great tutorial on YouTube on the basics of setting up and funding your Lightning Node to open your first channels:

Lightning Node Operators should have good routing settings / balancing / and fee settings - many of this can be automated, one application that can automate settings is Lightning Terminal

You can also see your fee report here for a nice breakdown:
sudo ~/umbrel/scripts/app compose lightning exec lnd lncli feereport

One easy way to gain liquidity is to install the Lightning Network+ App on your Umbrel

You can join or create a liquidity swap with your desired amount, it hooks up directly to your node for ease-of-use on the marketplace:

You can browse the popular network explorers or as well and pick a node you’d like to connect to, many of the top nodes are services that are known as “liquidity service providers”

This for instance is a top rated node that provides channel opening services:

You can check the or explorers for reputable and well-connected nodes and choose one, use the liquidity provider of your choice, or find someone in the community or a friend to open with (the advantage of an LSP is not waiting for someone to connect in something like the swap and be less worried if they go down or not, this comes with the trade-off of an added fee and centralization of the network)

This is one of the most popular communities of lightning node operators you can make posts to connect with, they have a Liquidity Swap channel here in their Telegram:

You just paste the pubkey of your other node once in agreement with them to open a channel, specify the channel opening amount that corresponds to the amount you have onchain, the peer then opens to you as well (in a liquidity swap you wait for the peer to open to you, or depending on the timeframe given by your liquidity provider)

Here are some other great communities and resources:

The official LND documentation:

The Reddit Lightning Network community: Reddit - Dive into anything

The official LND slack beginner’s channel:

Guide here on the forum to connect to wallets:


Core Lightning as referenced above,

Is also detailed here :slightly_smiling_face::