Progress pill
Managing your Lightning node

Obtaining inbound liquidity

Set up Your First Lightning Node

Obtaining inbound liquidity

  • Buying inbound liquidity
  • Cooperative inbound liquidity
As you can see, having outbound liquidity to make payments on Lightning is not particularly complex. Simply open channels on your own initiative to other nodes and start sending sats. On the other hand, having inbound liquidity to receive payments on Lightning is more complicated, since you either need other nodes to open channels to you, or you need to move the liquidity yourself by making payments.
If you adopt a "consumer" profile, there's generally no need to worry about inbound liquidity. Your use of the Lightning node will be predominantly payment-oriented, rather than cash-in. By simply making a few Lightning payments, you'll naturally create inbound liquidity over time.
On the other hand, if you have a "merchant" profile, the situation is reversed: you will mainly be collecting payments and making few of them. So you can't rely solely on your own payments for inbound liquidity. It therefore becomes necessary for other Lightning nodes to open channels to yours. But how can this be achieved? How do you get other operators to tie up capital for you? That's precisely what we'll explore in this chapter.

Buying inbound liquidity

As you'd expect, the most effective way of getting someone to act is to pay them. For inbound liquidity to your Lightning node, the principle is exactly the same. The simplest way to get channels to your node is to pay for the service and the capital tie-up involved.
If you're a business or retailer, this approach means you can quickly obtain reliable channels to collect payments from your customers without friction.
There are many ways to buy inbound liquidity. The one I personally use and recommend is Amboss's Magma platform. It's very easy to use, opening a channel is quick and rates are generally reasonable. Magma works like a marketplace with makers and takers, but version 2 has greatly simplified the experience: simply create a request, pay the price via Lightning, and Magma automatically matches it with the best available offer. After six onchain confirmations, your channel with inbound liquidity is up and running. Here's how it works:
Go to the Magma website, in the Buy Channels section.
If you wish, you can create an account to track your purchases, but this is not obligatory. If you do not create an account, Magma will simply provide you with a session ID, which will enable you to retrieve your purchases at a later date.
Once on the site, fill in the information required to purchase liquidity. Select One Time for a one-off purchase, then enter the amount you're willing to pay for inbound liquidity. The higher the amount paid, the greater the capacity of the channel opened to your node. An estimate of the channel's capacity appears below: this is an approximation, as the final amount will depend on the best offer found by Magma, which is sometimes higher, sometimes lower.
Then enter your node ID. You can find it, for example, in the Node ID menu of the Lightning Node application on Umbrel.
Once all the information has been completed, click on the Review & open order button.
If you have not created an account, Magma will provide you with a session key and a backup file. Keep these two items in a safe place, as they will enable you to retrieve the order at a later date, or to track its status in the event of a problem. Once you've saved the file, click on the Pay with Lightning button.
Magma then generates a Lightning invoice for the amount you have chosen. You must pay it. If you already have channels on your Lightning node, you can pay directly from it, or use another external Lightning wallet.
Once payment has been made, the transaction appears as being processed in the Magma interface.
After a few minutes, the request is processed: a channel with sats is being opened to your Lightning node. Once the opening transaction has been confirmed onchain, you'll have access to the corresponding inbound liquidity.
Magma is also integrated directly into ThunderHub. In the Home tab, scroll down to the Liquidity section and click on Buy Inbound Liquidity. All you have to do is enter the desired amount and confirm. You don't need to pay any invoices manually, as ThunderHub automatically takes care of payment from your node.
If you're a merchant, this type of service is particularly suitable, as it enables you to quickly obtain a large amount of inbound liquidity from reliable nodes, guaranteeing that your customers will be able to pay you without difficulty. On the other hand, if you're a private individual, or if you don't wish to pay for inbound liquidity, there are also free solutions. Let's take a look.

Cooperative inbound liquidity

If you're not a trader, but still need some inbound liquidity (for example, to prime your node at start-up, while you wait for some payments to be made) you don't necessarily have to pay for it. One of my preferred solutions is to cooperate with other node operators who also need inbound liquidity, to open Lightning channels for each other. In this way, opening a channel brings you outbound liquidity, while at the same time providing you with inbound liquidity, free of charge (modulo onchain fees for opening).
You can, of course, arrange this directly with fellow bitcoiners. However, there is a platform dedicated to this type of circular opening: Lightning Network +. The principle is not to open two channels between the same people, but to set up circular openings involving a minimum of three participants, or even more.
Let's take an example to understand how Lightning Network + works:
  • A node operator, named A, publishes an announcement stating that he wishes to open a 1 million sats channel with two other people;
  • The ad remains active until further participants are added;
  • Later, two operators, B and C, join the A node announcement. The triangle is now complete, and the opening phase can begin.
  • Node A opens a channel to node B;
  • Node B opens a channel to node C;
  • Node C opens a channel to node A.
At the end of the operation, each node has 1 million sats of outbound liquidity and 1 million sats of inbound liquidity. This scheme can be extended to four or five participants.
Of course, there is no technical mechanism to guarantee that a participant will actually open the channel they have committed to creating. That's why the platform has set up a reputation system, based on positive reviews when operators meet their commitments. And in the worst-case scenario, if you come across someone who doesn't cooperate, you won't have lost any money: you'll simply have missed an opportunity for inbound liquidity.
This solution is particularly suited to a "consumer" profile, as it allows you to obtain inbound liquidity free of charge, while connecting your node to other small operators. On the other hand, if you're a trader, this approach is generally not relevant: every sat of inbound liquidity requires blocking a sat of outbound liquidity, and your large needs for inbound liquidity would then involve tying up too much capital.
To use Lightning Network +, you have two options: either use the application integrated into Umbrel, or use the classic website and create an account by logging in from your node. I recommend the latter, as the integrated application doesn't offer the full range of available functions.
Go to the Lightning Network + website and click on the Login button at the top right of the interface.
To authenticate yourself, you need to sign the message provided using your Lightning node's private key. With ThunderHub, this operation is very simple. Start by copying the message displayed by LN+.
In ThunderHub, go to the Tools tab, then click on the Sign button in the Messages section.
Paste the authentication message provided by LN+, then click Sign.
ThunderHub then signs this message using your node's private key. Copy the generated signature.
Paste this signature into the corresponding field on the LN+ site, then click Sign in.
You are now connected to LN+ with your Lightning node. This process allows LN+ to verify that you are the rightful owner of the node you are claiming on their platform.
If you wish, you can personalize your LN+ profile, for example by adding a short biography.
To participate in your first circular channel opening, go to the Swaps menu at the top of the interface. Here you'll find all the swaps currently available, depending on your node's characteristics.
To join an existing swap offer, simply click on it and register. However, on LN+, the creator of a swap may impose certain conditions on participants, such as a minimum number of channels or a minimum total node capacity. It is therefore possible, especially in the early days, that few offers will be available to your node. In my case, despite a few channels already open, no offers were available for my node. So I created my own swap, and you can do the same if you're in the same situation.
Click on Start Liquidity Swap, then enter your offer parameters:
  • Choose the total number of participants (3, 4 or 5);
  • Indicate the amount of channels to be opened (make sure you have at least this amount in your onchain wallet);
  • Define the channel open time. This is the period during which participants agree not to close them;
  • On the right, you can set restrictions for participants: minimum number of channels, minimum total capacity and type of connection accepted.
Once all the parameters have been set, click on the Start Liquidity Swap button.
Your swap offer has now been created. Now all you have to do is wait for other node operators to sign up. If your conditions are not too restrictive, this shouldn't take too long. Remember to monitor the status of your swap in the hours or days that follow.
All the swap places have been taken: we now move on to the channel opening phase. Each participant can see, from his LN+ interface, to which node he has to open a Lightning channel.
On your side, open the channel using the Node ID supplied by LN+ and respecting the amount indicated. As we've seen in previous chapters, you can do this either via ThunderHub, with another Lightning node manager, or directly from the basic Lightning Node application interface.
Once the opening has been launched, you can see it appear in the waiting channels section. In my case, it's the channel with the node Plebian_fr.
You can then return to LN+ to confirm that you have initiated channel opening. Simply click on the Channel Opening Started button.
When all the other participants have also opened the channel to which they have committed, remember to leave them a positive review.
In the event of difficulties or delays, you can contact your peers directly via the comments section at the bottom of the page.
Some participants may wish to rebalance the circular channels from the outset, by making a payment to themselves. This ensures a balanced distribution of cash in each channel. If you're in a "consumer" profile, this isn't essential, but you can either do this rebalancing yourself if you wish, or temporarily set your channel fees to zero to make it easier for the peer who wants to do it. Sometimes nobody wants to do it.
Quiz
Quiz1/5
Which free solution for inbound liquidity is based on cooperation?