BTCPay Server

# Opening and operating payment channels

Given that the Lightning Network is a relatively new technology under active development, getting your freshly deployed node ready to send and receive payments, still, requires a couple of steps.

Overview:

  1. The lightning node is deployed, enabled and its on-chain wallet is funded
  2. A peer is identified and the first payment channel is opened
  3. Inbound and outbound liquidity is acquired. The node is now able to send and receive
  4. Liquidity management, an ongoing process to maintain the capacity to send and receive

Key considerations:

  • Choosing the channel partner. Consider opening the first channel to a well connected peer with robust uptime. This will increase the chances for your payments to be routed and settled.
  • Inbound vs outbound capacity. Outbound capacity allows nodes to send payments whereas inbound capacity allows nodes to receive payments. As a merchant using lightning, having inbound capacity is essential for customers to be able to pay you.
  • Inbound capacity. A node adds inbound capacity by either spending sats from its local balance or having other nodes in the network open channels to it.
  • Liquidity management: maintaining the ability to send and receive is a continous process where a balance between inbound vs outbound capacity has to be maintained across payment channels. This capacity distribution must be adjusted depending upon the use case of the node operator.
  • Lightning Service Providers: LSPs offer paid third-party services that improve the ease of operating a lightning network node. Such services can be used to acquire inbound capacity or to automate the rebalancing process.

Below a set of good resources for a deeper dive into topics such as: