> For the complete documentation index, see [llms.txt](https://docs.lightning.engineering/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.lightning.engineering/the-lightning-network/liquidity/lightning-service-provider.md). # Lightning Service Provider A Lightning Service Provider (LSP) deploys liquidity in the Lightning Network on behalf of others. A Lightning Service Provider (LSP) is an entity providing liquidity services on the Lightning Network on behalf of others. Channels in the Lightning Network are naturally constrained by their size, and capacity is further limited by local and remote balances. Lightning Service Providers typically help manage a user’s liquidity by performing one of two tasks * Swapping on-chain funds for off-chain funds or vice versa * Opening channels to increase a user’s [inbound capacity](/the-lightning-network/liquidity/how-to-get-inbound-capacity-on-the-lightning-network.md) or improve their [position in the graph](/the-lightning-network/pathfinding/finding-routes-in-the-lightning-network.md) Ideally, a Lightning Service Provider interacts with their clients in a purely non-custodial way. Swaps can be constructed as [Submarine Swaps](/the-lightning-network/multihop-payments/understanding-submarine-swaps.md) to guarantee that the service provider cannot abscond with funds at any time. When opening channels to peers, the LSP retains custody over their side of the channel and earns routing fees as they forward payments. Today, LSPs are most commonly known for providing liquidity to users of non-custodial wallets in the form of channels. This lets users immediately receive Lightning payments to their wallets without requiring active channel management or ownership over a UTXO. The LSP typically charges an upfront payment to compensate for mining fees and capital costs. These fees are often deducted directly from an incoming payment, but could also be charged upfront. It may be difficult for the LSP to assess how large a new channel to a user should be. An LSP may borrow bitcoin for this task, or deploy their own funds. It is also possible for an LSP to buy such channels on the open market, such as [Lightning Pool](/lightning-network-tools/pool.md) using sidecar channels, instead of opening them themselves. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://docs.lightning.engineering/the-lightning-network/liquidity/lightning-service-provider.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.