3.15 LSPs: The Plumbers of Lightning
Liquidity Service Providers and the emerging market for channels.
LSPs: The Plumbers of Lightning
A Liquidity Service Provider (LSP) is a Bitcoin business that opens Lightning channels on demand and sells you the inbound capacity you need to receive payments. They're the invisible plumbing behind mobile wallets like Phoenix, Breez, and Mutiny — when you install one of these wallets and receive your first payment, the LSP is what makes it work seamlessly.
A Liquidity Service Provider (LSP) is a Bitcoin business that opens Lightning channels on demand and sells you the inbound capacity you need to receive payments. They're the invisible plumbing behind mobile wallets like Phoenix, Breez, and Mutiny — when you install one of these wallets and receive your first payment, the LSP is what makes it work seamlessly.
A standardised LSP spec lets wallets shop across multiple providers, so users aren't locked into a single company. Open-source competition keeps fees low.
There's also a small but real market for Lightning capacity itself — services like Magma, Lightning Pool, and Amboss let node operators buy and sell channels competitively, the way real markets buy and sell other forms of capital. It's an emerging Bitcoin-native financial layer.