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I am not able to understand why if a popular ecommerce will not lack incoming capacity and the below highlighted part

Closing channels will incur an on-chain fee and will reduce your Lightning node’s capacity and connectivity. However, if you run a popular ecommerce node, you will not lack incoming capacity and can strategically close channels with large local balances, essentially “bundling” your funds for movement on-chain. You may need to use some channel rebalancing techniques (see “Rebalancing Channels”) before you close channels to maximize the benefits of this strategy.

Antoine Poinsot
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Arjun Reddy
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1 Answers1

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This is a matter of liquidity. A payment channel of 1BTC may only transfer at most 1BTC [0] in each direction.

Let's take an example: Alice and Bob have a 1BTC payment channel:

Alice <- 1BTC -> Bob

There is 1 bitcoin locked in the channel. Funds are necessary on one side or the other. For instance, let's say Alice unilaterally funded the channel. At the beginning, she'll have all funds on her side:

Alice            Bob
-----            ---
1 BTC            0 BTC

Now if she pays Bob, the amount of funds locked in the channel will not change. She necessarily sends some from her side to the other:

Alice            Bob
-----            ---
1 BTC            0 BTC 
0.9 BTC          0.1 BTC

If Bob is selling stuff and getting paid in BTC through this channel (whether it is Alice paying him or someone else routing their payments through Alice's channel with Bob), Bob will tend to get all the channel funds on his side of the channel over time:

Alice            Bob
-----            ---
1 BTC            0 BTC 
0.9 BTC          0.1 BTC
0.6 BTC          0.4 BTC
0.7 BTC          0.3 BTC
0.1 BTC          0.9 BTC
0 BTC            1 BTC

At this point Bob cannot receive funds from this channel anymore. He can close the channel to withdraw onchain his 1BTC. This is what the text you quote is referring to. We can say Bob "bundled" a large number of small incoming payment in a single onchain transaction moving an entire BTC.

[0] Conceptually. Technically, it's less than that.

Antoine Poinsot
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  • Heh, looks like i read your question too quickly and didn't actually answer it. The response might just be that the document assume if the e-commerce is popular, people will open channel to them and therefore they wouldn't lack incoming capacity. – Antoine Poinsot Jul 29 '22 at 09:40