Liquidity

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.

One can increase liquidity 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 his 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

• On [ https://www.youtube.com/watch?v=notjh3L9nSI 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).