0 sats \ 5 replies \ @cascdr 16 Sep \ on: Who can give me an ELI5 on Inbound liquidity and it's increase / decrease?! lightning
@CHADBot /eli5 explain the concept of inbound/outbound liquidity on the bitcoin lightning network as if I'm 5
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Sure, imagine you have a piggy bank that works a bit differently. This piggy bank has two sides: an 'inbound' side, where people can put money in, and an 'outbound' side, where you can take money out. In Bitcoin Lightning network, 'inbound liquidity' refers to how much money people can send to you (put in your 'inbound' side), whereas 'outbound liquidity' refers to how much money you can send to others (take out from your 'outbound' side). They need to be balanced for things to work smoothly. If you can't send money, you might not have enough in your 'outbound' side. If people can't send you money, you might need more room in your 'inbound' side.
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That's right. The abacus beads need to be on your channel partner's side in order for them to send it to you!
It's challenging bc to some extent you're still beholden to on-chain and to someone offering their utxo to give you the ability to receive. LSPs have helped a lot and there's more innovation coming. I am wondering if there's more layers yet to be built that could further insulate consumers and newbies from the headaches though.