Easily make lye at home by dripping water through wood ash. Lye made by this process is potassium hydroxide, which you can mix with beef tallow, olive oil, coconut oil, lard or many other types of fat to make homemade lye soap. Commercial lye, or sodium hydroxide, is a different substance.
Drill a hole in a tall, deep, plastic bucket one-eighth inch in diameter and one inch from the bottom. Use care so that the plastic does not crack in the process of creating the hole.
Plug the hole in the pail or bucket with a nail. The nail should fit securely so that no liquid can come out.
Elevate the bucket a foot or two from the ground by placing it on a chair or a stump, or a similar object. An old plastic lawn chair works great for this purpose. Be aware that the lye-making process will likely ruin the chair for any other purpose in the future.
Add wood ash to the bucket until it is half full. Use only the white ash itself, not the charcoal bits. Add the ash slowly as to not kick up too much dust.
Boil enough soft water to fill the bucket or pail halfway with water. The softest water available comes from the sky in the form of rain or snow. If rainwater or snow is available, use that. Tap water is also okay to use to make lye from wood ash, especially if your home uses a water softener.
Place a bucket on the ground directly below the nail, so that if you were to remove the nail, liquid would flow into the bucket on the ground.
Put on the safety goggles and rubber gloves.
Pour the boiling water slowly and carefully over the wood ash in the bucket with the ash. The water and wood ash will probably fizz and bubble. Alternatively, the water may appear to just sit on top of the lye. Both situations are fine.
Remove the nail from the bucket. Lye water will drip from the bucket with the wood ash into the empty bucket. It may take several minutes or longer for the dripping to begin.
Leave the buckets alone for several hours to several days. When all the lye water has dripped into the bucket on the ground, plug the hole with the nail.
Using safety goggles and rubber gloves, carefully pour the lye water from the bucket into a pan that you plan to never use for food. It's a good idea, if you don't have such a pan at home, to go to a thrift store or resale shop to pick one up cheaply. Be sure the pan is not lined with a nonstick coating.
Bring the lye water to a boil on the stove. Be sure no food is on the stove when the lye water is boiling and be sure to continue to wear safety goggles and rubber gloves throughout this process. Replace the now-empty bucket in order to catch the lye water.
Slowly pour the boiling lye water onto the wood ash, still wearing rubber gloves and safety goggles. The liquid and ash will hiss and bubble at this point.
Unplug the hole by removing the nail to allow the lye to drip into the bucket in which the lye water was collected previously. Let the setup sit for another several hours to several days.
Place an egg in the cold lye water. If the egg sinks, the lye is not strong enough. Repeat steps 6 through 13 until the lye is at the correct strength. If the egg floats on top of the lye water, it is too strong. Add some fresh water to the lye and repeat steps 6 through 13. If the egg floats on the water with a little water above it, the strength is just right.
Place the lye water in the sun in a protected area for several weeks until the water evaporates and crystals form. The lye crystals are ready to use in soapmaking.