See also: Incoming liquidity
In order to make payments, i.e. pass funds around, the path on which the payment is routed must have the necessary funds for the payment. If a route does not have the necessary funds the payment cannot go through. I.e. the route or the network is not liquid enough. Therefor it is important for a Lightning node to be well-connected because then better, or more liquid, routes can be found. Liquidity is also sometime referred to as financial "Network Capacity".
Liquidity is increased by:
- starting a new Lightning node and giving funds (e.g. Bitcoins, Litecoins) to this node
- topping up the funds of an existing Lightning node. The Lightning node operator can place addition funds into its node.
- creating a payment channel and placing funds into it, as in creating a wallet and placing funds into it