Lightning service provider
A Lightning service provider (LSP) is a Lightning Network node operator that sells inbound liquidity and related services to wallets, most commonly by opening channels toward the wallet so the wallet can receive payments. The role is an application-layer business on top of the Lightning peer protocol, not a consensus change.
A Lightning payment can only be received on a channel that already has bitcoin on the remote side (inbound capacity). A new wallet has no channels until some peer opens toward it or the wallet opens outbound and later receives. LSPs perform that operational work (on-chain fees, UTXO management, and staying online). Early providers each exposed a proprietary API. A common specification effort (originally LSPS) was later published as Bitcoin Lightning Improvement Proposals (bLIPs) in the lightning/blips repository.
The LSP and the wallet are ordinary Lightning peers. Service requests ride on the encrypted BOLT 8 transport as JSON-RPC 2.0 payloads (message type 37913), defined as LSPS0 / bLIP 50. LSPS1 / bLIP 51 standardizes purchasing a channel (order, payment, open, refund on failure). LSPS2 / bLIP 52 standardizes Just-in-time channel opens: the LSP intercepts an incoming HTLC, opens toward the wallet (often zero-conf), and forwards the payment minus an opening fee. LSPS5 / bLIP 55 registers HTTPS webhooks so a usually offline mobile wallet can be notified of activity. Related tools for channel capacity include Dual funding and Splicing. An LSP is a liquidity counterparty, not a custodian of the wallet's channel keys when the wallet holds them. Receiving still depends on the LSP's willingness to extend inbound capacity and on the LSP's own outbound routes. Watchtower services are a separate always-on watcher role; some hosts combine both functions.