Liquidity

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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

Liquidity is shown on certain Lightning Network explorers such as 1ML.

Liquidity Growth[edit]

  • On November 19, 2018 the overall liquidity of the Lightning Network was around $1,000,000.
  • On February 1, 2019 the overall liquidity of the Lightning Network was 625.65 BTC or $2,169,594 (source 1ML).