Becoming a Lightning Service Provider (LSP)

Earn Bitcoin While Powering the Global Payment Layer

“I don’t need a license to route packets on the internet—why would I need one to route Bitcoin?”

Welcome to the sixth post in our Bitcoin + Lightning series.
Now that we’ve explored how the Lightning Network works, it’s time to go a step further:

How do Lightning Service Providers (LSPs) operate?
How do they earn income?
And how can someone in Malaysia or any emerging market become one?

This post breaks it all down—sovereign, technical, and business-wise.

🏦 What is a Lightning Service Provider?

A Lightning Service Provider is like a decentralized payment router.
You’re not holding other people’s money—you’re forwarding it across the Lightning Network using your own BTC liquidity.

LSPs make Lightning usable for the masses by:

• Offering inbound liquidity
• Ensuring payment reliability
• Managing channel uptime and rebalancing
• Charging small routing or service fees for doing so

Think of it like this:

If Bitcoin is the money, Lightning is the highway, and LSPs are the toll booths and highway maintainers.

💸 How Do LSPs Earn Revenue?

LSPs generate income through multiple mechanisms:

Some nodes earn 100–500k sats/month passively just from routing.
Power users and institutional-grade LSPs can earn much more—especially by selling liquidity as a product.

🧠 What Makes a Good LSP?

If you want to succeed as a Lightning Service Provider, you need:

1. Capital (BTC)

You’ll need to commit BTC into channels.
Start small: 0.01–0.1 BTC is enough to learn and experiment.

2. Good Connectivity

Peers matter. Connect to active wallets, exchanges, or hubs:

• Wallet of Satoshi
• Phoenix ACINQ
• River
• Bitrefill
• LN Markets
• Amboss Recommended Peers

3. Channel Strategy

• Open balanced channels
• Monitor capacity and rebalance as needed
• Keep channels active (non-zombie)

4. Uptime

Your node must be online 24/7. Downtime = lost payments = lost trust.

5. Fee Strategy

• Low enough to attract volume
• High enough to be profitable
• Dynamic fees via Charge LND or BOS scripts

6. Reputation

• Appearing on Amboss, Terminal Web, or lnnodeinsight.com helps
• Good routing reliability = preferred route in auto-pathfinding

🛠️ How to Set Up a Node (3 Paths)

🧑‍💻 Path 1: Self-Hosted LSP Node (DIY)

• Buy a Raspberry Pi, NUC, or rent a VPS (e.g. Hetzner, Voltage)
• Install LND or Core Lightning
• Run ThunderHub or RTL for dashboard
• Connect to peers, fund channels
• Monitor and rebalance regularly

💰 Ideal for those who want full control + technical learning.

⚙️ Path 2: Cloud LSP with Automation

• Use Voltage or Start9
• Automated backups, uptime, failover
• Built-in LN tools (BOS, Webhooks, Watchtowers)

💰 Ideal for scaling, reliability, and uptime guarantees

🧪 Path 3: Experimental Sovereign LSP

• Combine LNbits for merchant integrations
• Run Tor or clearnet node
• Experiment with liquidity marketplaces (e.g. Magma, Lightning Liquidity Ads)

💰 Ideal for sovereign micro-businesses or Lightning-native startups

🇲🇾 Why This Matters in Malaysia

Most Malaysians rely on DuitNow, FPX, Touch ‘n Go, or Maybank2u—all of which are:

• Closed systems
• Censorable
• Subject to fees and inflation risk

Lightning is open, global, and permissionless.
LSPs in Malaysia can:

• Provide BTC-native infrastructure for local merchants
• Serve regional freelancers, creators, and exporters
• Earn income from routing global sats traffic

In the future, LSPs may become as important as web hosting providers were in the 90s.

🚀 KheAI’s Minimalist LSP Stack

Our actual setup at kheAI (2025 edition):

We’re committed to open-source, sovereignty, and stacking sats as we teach others how to do the same.

🧰 Tools & Resources

🧭 Starting Small: A Path for New LSPs

You don’t need 1 BTC to start.
Here’s a simple plan:

1. Start with 0.01–0.05 BTC liquidity
2. Open channels to 3–5 active peers
3. Set low fees (ppm) to attract volume
4. Use BOS or ThunderHub to monitor + rebalance
5. Watch routing stats daily
6. Join Amboss, Telegram groups, and Nostr communities
7. Offer custom liquidity channels or tools to creators

Your first 100k sats of routing revenue may take weeks or months—but the learning is priceless.

🎯 Final Thoughts: Be the Infrastructure

Lightning is still young.
You have a chance now to become part of the monetary infrastructure of the future.

Just like web hosting, domain registrars, or cloud providers—LSPs will be essential to a free and open Bitcoin economy.

Whether you want to:

• Build a side business
• Provide tools for creators
• Replace remittance channels
• Educate others
• Or just stack sats passively

…becoming an LSP gives you both technical leverage and economic sovereignty.

📦 Next: Managing Liquidity Like a Pro

In the next post, we’ll explore Lightning Liquidity Strategy:

• What is inbound vs outbound liquidity?
• When to rebalance, and how?
• How to avoid capital waste?
• Liquidity marketplaces: Magma, Liquidity Ads, PeerSwap

kheAI is a minimalist Lightning-native microbusiness from Malaysia.
We run an LSP node, write educational content, and help creators and merchants accept Bitcoin.
Visit kheai.com or follow us on Nostr/X to join our mission.