Loop is a service that enables lightning node operators to convert their on-chain BTC into Lightning BTC, and vice versa.
"Looping in" serves multiple purposes:
- it increases a node's lightning inbound liquidity - it sends the liquidity into the channels that are in most need of inbound liquidity, so they end up in a balanced state
"Looping out" is primarily used to transfer lightning funds back to on-chain.
Installing loop requires installing lit 'the lightning terminal'.
Lit is composed of multiple binaries, which can either be run on the node directly, or externally to the node by setting up proper access.
Lit binaries are
Lit needs to be configured with a variation of the lnd.conf file, and the lnd process needs to first be shut down before lit can be launched.