Lightning Pool Liquidity With Voltage Flow
Lightning node cloud hosting platform Voltage announced Flow, a new interface that aims to make the Lightning pool liquidity market more accessible to everyday users. Pool is an open marketplace that allows Lightning nodes to open channels and purchase inbound or outbound capacity for a fee.
“Flow gives the Lightning liquidity market a simple interface for those who need liquidity,” according to a press release sent to Bitcoin Magazine. âWith Flow, you can leverage our easy-to-use API or dashboard (coming soon) to create orders in pool auctions. No need to create your own Pool account.
Flow makes it easier for Lightning Network participants to increase their inbound or outbound capacity on demand by automating the process of finding nodes and selecting high-quality channels. It relies on the BOS Score to relieve participants of manual online search for good peers.
Customers can use Flow by creating a Voltage account and installing the Pool daemon on their node, which when complete will allow them to use the Voltage API to create an order for a new channel. Payment for the chain can be made with a chain or Lightning transaction, and a sidecar ticket will be generated upon payment. Finally, the user must register the ticket with the Pool daemon.
Flow is currently available in beta and only through the Voltage API. The node hosting company said it is working on integrating Flow into its web platform, but did not provide a timeline.
The Importance of Liquidity in the Lightning Network
Liquidity is an essential aspect of managing your Lightning Network node and its channels. The incoming capacities of its peers will determine the number of bitcoins they can receive, and their outgoing capacities will determine the number of bitcoins they can send.
The aggregate capacity is added to a channel during its open transaction, the amount of which becomes the total capacity of that channel. Initially, the inbound capacity is zero for the peer that initiated the channel with the open transaction and equal to the full capacity for the other peer. The reverse is true for the outgoing capacity for each peer.
Users can gain outbound capacity by opening a channel with another peer on the network, but to receive Lightning transactions, inbound capacity must be acquired. Regarding a specific peer, they can increase their incoming capacity by spending satoshis towards the other peer, which will increase their outgoing capacity by receiving them.
But a delicate part of Lightning liquidity management is how to add inbound capacity beyond the full capacity of a channel once it is already open.
Lightning pool is an option to increase inbound capacity. It enables a Lightning Network participant to acquire liquidity by signaling a need and enticing others to open channels with them with their capital, allowing participants to quickly acquire large amounts of liquidity.
âThe pool makes it easy for a new network participant to bootstrap their ability to receive funds by paying only a percentage of the total amount of inbound funds acquired,â according to documentation from Lightning Labs. âFor example, a node could acquire 100 million satoshis … for 100,000 satoshis, or 0.1%. Ultimately, the prices will be determined by the open market.
By purchasing a channel on Pool, users can access bitcoin liquidity faster for those with capital to deploy on the Lightning Network, without needing to actually know an interested peer. – and Flow seeks to make this process easier for everyday users of the Bitcoin second layer solution.