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LESSONS

Liquidity: the thing nobody explains

A channel's capacity is shared between the two sides. You can only receive what is on the other side. New users must get inbound liquidity to be paid.

5 MIN READ
A channel's capacity is split between outbound and inbound liquidity.
LEVEL · Intermediate
IN THIS LESSON · 4 OF 7
BY THE END YOU WILL BE ABLE TO ANSWER
  • Why can't a freshly opened, self-funded channel receive?
  • You opened a 500,000 sat channel with your own funds and have since sent 150,000 sats through it. How much can you now receive through that channel, in sats?

Then prove it: a 1-question quiz · a challenge. The lesson marks itself complete at 100%.

The question every new Lightning user hits: "why can't I receive?" The answer is liquidity.

Two sides of a channel

A channel has a fixed capacity, split between the two parties. Your side is your outbound liquidity: what you can send. The other party's side is your inbound liquidity: what they can send to you, which is what others can pay you through them.

If you open a 1 million sat channel by funding it yourself, all 1 million is on your side. You can send up to 1 million and receive nothing until you have sent something, which moves balance to the other side.

Getting inbound

  • Spend first. Every payment out creates room to receive.
  • Buy it. Liquidity providers will open a channel to you for a fee, or you can swap: send bitcoin to a service on-chain and receive it on Lightning (a submarine swap), which fills your inbound side.
  • Let the wallet do it. Consumer wallets handle this automatically, charging a fee the first time you receive.

Why it is like this

Lightning payments move existing funds along paths; they do not create balance. Liquidity must be placed where payments will flow. Routing nodes make a business of this, earning fees for keeping balanced channels in useful places.

For most people

Use a wallet that manages it. Understand that the first receive may cost a small fee, and that a "balance" on Lightning is really capacity in channels.

MINI CHALLENGEWhich way can it flow?

You opened a 500,000 sat channel with your own funds and have since sent 150,000 sats through it. How much can you now receive through that channel, in sats?

sats
CHECK YOURSELF
1/1 Why can't a freshly opened, self-funded channel receive?
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