Lightning Network Liquidity: Ark vs LSP by Usage Frequency

Research by Matthew Vuk compares liquidity requirements of Ark service providers and Lightning Service Providers (LSP) across user behavior patterns on the Lightning Network. Using simulations, they measure liquidity lock-up time per satoshi (sat-day) for two scenarios: low-frequency top-ups and slow spenders versus regular bitcoin investors. For users topping up weekly and spending daily, LSPs lock liquidity for 4.09 days per unit versus Ark’s 10.13 days, making LSPs 2.5× more efficient. Monthly top-ups show similar efficiency (~16.2 days vs 17.0 days). However, for quarterly top-ups and scheduled investors, Ark reduces locked liquidity to 17.17 days and 31.6 days, beating LSPs by 3.7× and 6.65× respectively. The findings demonstrate that Lightning Network liquidity providers should choose the service type based on user recharge frequency: frequent transactions favor LSPs, while infrequent or investment-driven users benefit from Ark’s liquidity model. This insight helps traders and node operators optimize channel funding strategies and lower liquidity costs on the Lightning Network.