The Lightning Network (LN) is a Layer 2 protocol on top of Bitcoin that seeks to improve scalability by moving small and frequent transactions off-chain, allowing for fast peer-to-peer transactions and low fees.
LN is made up of a network of interconnected payment channels. A channel is opened when two or more participants enter a transaction on the public Bitcoin blockchain and deposit some amount of funds. While the channel is open, participants can sign any number of transactions among them (without exceeding the amount deposited). The transactions are recorded and signed in an off-chain ledger instead of the main Bitcoin blockchain. When the channel is closed, the most recent state of the off-chain ledger is published to the main Bitcoin blockchain, updating each participant's bitcoin balance.
Because LN nodes (i.e., users in LN channels) are interconnected, nodes do not always need to open a direct channel with everyone they want to transact with. Payments can be routed through other channels, provided that a path with adequate liquidity exists between the two transacting nodes.
It's worth noting that DeFi Pulse tracks only public Lightning channels' capacity.
How to use Lightning Network?
To use the Lightning Network, start with a fully-synced Bitcoin node, then download the Lightning Network daemon and let it sync. Then you can fund your Lightning account and start opening channels. The community installation guide is [here, https://dev.lightning.community/guides/installation/].