# State Channel Liquidity Problem

In addition to the [data avaliablitity problem](../sgn/availability.md) described previously, state channel networks gain scalability also by trading off network liquidity. The two peers in a CelerPay channel can safely send each other payments at high speeds without on-chain transactions because they have deposited the required liquidity into the on-chain contract. This upfront liquidity locking works fine for the end users because they can simply deposit their tokens to the channels and enjoy the scalable dApps, just like using a debit card. However, this could pose a great challenge for those who want to operate as off-chain service providers (OSPs), because they need to lock tokens in each connected payment channels. Therefore a significant amount of crypto liquidity is needed by the OSP to provide effective off-chain services to a large number of user clients. 

While running an OSP requires lots of liquidity, owners of a large number of crypto assets (whales) may not have the business interest or technical capability to run an off-chain service infrastructure. On the other hand, people who have the technical capability of running a reliable and scalable off-chain service often do not have enough capital for channel deposits. Such a mismatch could create a huge hurdle for the mass adoption and technical evolution of off-chain state channel networks.

To address this challenge, Celer provides a liquidity backing platform for OSPs to obtain enough liquidity through crowdlending, and for people to reliably earn interests from their idle crypto assets. [Next section](./backing.md) details the Celer liquidity backing mechanism.