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3 sats \ 1 reply \ @siggy47 29 May 2022 \ on: A problem with Bitcoin's Lightning Network liquidity and ideas to address it bitcoin
Good article, but I felt left hanging at the end. There was no specific proposal to address the problem at the protocol level. Perhaps it's my technical ignorance, but is there an obvious protocol fix? Also, the free market solution, as @tomlaies suggests, may solve this issue over time.
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6 sats \ 0 replies \ @LaserStack 29 May 2022
There are multiple protocols already in use to alleviate the problem, but none of them completely fix it. Some examples are:
  1. Liquidity ads. They allow people with excess capital to lend it as inbound liquidity to others who need it.
  2. Opening a channel to someone else and using peerswap to swap the channel funds to the other side, creating inbound liquidity for you.
  3. Hosted channels allow someone else to open channels to you without paying on-chain fees or having to commit capital, eliminating the cost of opening a channel to you. Note that you have to trust the channel opener to not exit scam you, though if they do you have cryptographic proof of it.
You can also create inbound liquidity by just making payments over LN.
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