The Lightning Network FAQ

[LoyceV]

Phoenix has a well-connected node. They are basically forcing you to route your LN transactions through their nodes, so they receive the routing fees, and are also receiving the portion of the transaction fee that is a % of the transaction amount. Since all transactions must go through their channels, they control the fees that are paid both by you and by anyone who sends a payment to you.

All true But: the LN fees aren't high, it's usually around 0.01% when I send a five-digit transaction (although one 2 sat transaction took 3 sat in fee). It's a lot lower than (custodial) BlueWallet, which charges 0.3 to 1% fee (and doesn't round up, so small transactions are free).
All in all I'm happy with these fees.

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[Pmalek]

But: the LN fees aren't high, it's usually around 0.01% when I send a five-digit transaction (although one 2 sat transaction took 3 sat in fee). It's a lot lower than (custodial) BlueWallet, which charges 0.3 to 1% fee (and doesn't round up, so small transactions are free).
All in all I'm happy with these fees.

That 0.01% is the fee rate of Phoenix wallet isn't it? It's the percentage that the node charges for routing the payment. Besides the fee rate, there should also be a base fee. What's the base rate of each transaction charged by Phoenix wallet?

[Rath_]

Besides the fee rate, there should also be a base fee. What's the base rate of each transaction charged by Phoenix wallet?

There is no reason why you could not set the base fee to zero. I am not sure if that's the case here, though.

Edit:

Sending LN payments: as low as 1 sat + 0.01% of the amount sent. If no route can be found for this price, the fees will increase gradually up to a maximum of 12 sats + 0.3%.

[LoyceV]

That 0.01% is the fee rate of Phoenix wallet isn't it?

Correct. A few examples:

|	Amount sent (sat)	|	Fee (sat)	|
|	2,000	|	1	|
|	90,000	|	10	|
|	2	|	3	|
|	44,000	|	5	|
|	140	|	3	|
|	23,000	|	3	|
|	100	|	1	|
|	62,000	|	7	|

The 90,000 sat transaction would cost probably cost 270 (and potentially up to 900) sat fee if I would have used BlueWallet.

[Timelord2067]

...  That's one of the reasons I like Phoenix Wallet so much: when I sent 420,000 sat, I got a channel with 420,000 sat (minus 0.1%) outgoing capacity, and also more than 200,000 sat incoming capacity. I didn't have to do anything.  ...

OK... I'd heard of Phoenix LN Wallet a while ago, but hadn't done anything to investigate it until now.  Not long after the above post I followed the github link and downloaded the Android APK, installed it ^{on a 7" tablet} and then sent the bc1... wallet address BTC 0.01 ^{from my mobile phone's Eclair Wallet} as I'd briefly read that Phoenix is based on Eclair LN Wallet which I have been using for some time now.  ^{(Just as an aside, none of the Eclair LN channels values on my mobile phone have changed for many weeks)}.

I'd paid 20sats/byte TX fee and not long later I discovered 999,000 sats had been created into a channel ^{(The channel connects where to?  No idea at this point)} with ~3,750 INBOUND capacity inbuilt into the single channel.

Having probably misread the above post, I waited 24 hours and no additional channels (with inbound capacity) were created, so I sent 100,000 to a LN wallet on another device.

Another 24 hours went by and still no inbound channels were created, so I sent via LN (from a secondary LN source) ~2,500 sats bringing the balance just above 902,000 sats.  But no secondary LN channel was forthcoming.

The next day, I sent the Phoenix Wallet BTC 0.001 from a different wallet to all previous sources thus far to a bc1... wallet address rolled by the App.  After generating the wallet address, I shut the program down and left it closed until after the funds had had a number of confirmations.

12 hours ago, roughly 12 hours after sending the BTC 0.001 I opened the Phoenix Wallet and got a near instant message stating the funds had arrived via the bc1... wallet address.

However, when I went into the channel list I discovered a second LN channel has been opened but with 99,900 sats outbound AND ~122,000 sats inbound capacity in the one channel.

on reviewing the wallet address in mempool.space (their linked block explorer) I can only see one inbound and one out bound transaction cancelling my theory the other side sends funds to jointly open a channel then sends funds out to create inbound capacity

However #2 the outbound TX has three wallet addresses sending funds to another (two) addresses.  I suspect one very close to the combined inbound/outbound/TX fee is "my" transaction which then lends me to suspecting Phoenix co-creates it's channels using your and their funds.

Which makes me wonder just how "custodial" Phoenix really is?


Unfortunately, as with the Eclair LN Wallet I seem to be in the same predicament in that as soon as the screen goes dark, the program goes into hybernation and the channels effectively go off-line (so I can't run Phoenix as a node on my tablet)

I also can't open channels to whomever I want to either, so (if my five week (and counting!!) TX from one Zap wallet to another Zap wallet ever gets confirmed) I'll be back to creating a series of Zap LN channels which I can keep open on my PC.

(mumble Now that I have a working PC again... mumble)

[LoyceV]

and then sent the bc1... wallet address BTC 0.01

That's about $600, a lot more than what I'd use to try a wallet.

as I'd briefly read that Phoenix is based on Eclair LN Wallet

As far as I know, both wallets come from acinq.co.

I'd paid 20sats/byte TX fee and not long later I discovered 999,000 sats had been created into a channel ^{(The channel connects where to?  No idea at this point)} with ~3,750 INBOUND capacity inbuilt into the single channel.

The channel connects to ACINQ. Click Settings > Channel list > click a channel to see the node.
That's a disappointing inbound amount. I'm starting to think it's just the closest on-chain input they have available for this, and anything above the required amount will be your inbound capacity.
I created another channel a with 3 mBTC recently, and it started with about 1.5 mBTC inbound capacity.

Another 24 hours went by and still no inbound channels were created, so I sent via LN (from a secondary LN source) ~2,500 sats bringing the balance just above 902,000 sats.  But no secondary LN channel was forthcoming.

In my experience, the inbound capacity occurred instantly when the channel was opened. It would have been interesting to see what happens if you sent more than 3,750 to the wallet. I would expect Phoenix to open another channel, but haven't tried that from a LN deposit yet.

However, when I went into the channel list I discovered a second LN channel has been opened but with 99,900 sats outbound AND ~122,000 sats inbound capacity in the one channel.

Those amounts are more in line with my experience. Maybe they didn't anticipate a 10 mBTC channel

on reviewing the wallet address in mempool.space (their linked block explorer) I can only see one inbound and one out bound transaction cancelling my theory the other side sends funds to jointly open a channel then sends funds out to create inbound capacity

My theory is they open a channel, then instantly balance it so you get the required amount on your side.

which then lends me to suspecting Phoenix co-creates it's channels using your and their funds.

That's my assumption too.

Which makes me wonder just how "custodial" Phoenix really is?

The website explains which parts are custodial and which parts aren't. I don't really have the knowledge (or time) to verify it (I just use the wallet).

Unfortunately, as with the Eclair LN Wallet I seem to be in the same predicament in that as soon as the screen goes dark, the program goes into hybernation and the channels effectively go off-line (so I can't run Phoenix as a node on my tablet)

If it's screen related, an easy solution on Android is to set Stay Awake when charging. I mainly use LN to pay, so this doesn't bother me.

I also can't open channels to whomever I want to either

It's a feature, not a bug

Today I couldn't send 100 sat from BlueWallet to Phoenix Wallet. But as expected, it worked by sending from Blue to  Lightning-Roulette, and from there to Phoenix. I've seen this before, it's as if the wallets can't find the correct route on their own.

[NotATether]

Moved from another thread where it's on-topic. Is it true that Lightning Network uses BTC values that aren't equal to their mainnet counterparts?

Does 1 mainnet BTC really ≠ 1 LN BTC?

Lightning would have been good, but I have one big problem: the value. 1 BTC ≠ 1 LBTC. Because of this, it is possible to lose a lot of money due to price fluctuations.

It would be damning if bitcoins on LN don't trade 1:1 (or at least close to it) against bitcoin, because that would impede people from moving their bitcoins to it.

[LoyceV]

Is it true that Lightning Network uses BTC values that aren't equal to their mainnet counterparts?

No. Any site I've seen uses the same exchange rate for on-chain Bitcoin and LN Bitcoin. Only fees are different, and that might include an additional cost for on-chain consolidation (I've seen a payment processor add 0.0002 BTC to the on-chain Bitcoin amount for this).

Does 1 mainnet BTC really ≠ 1 LN BTC?

No, not really.

Lightning would have been good, but I have one big problem: the value. 1 BTC ≠ 1 LBTC. Because of this, it is possible to lose a lot of money due to price fluctuations.

Lightning Bitcoin LBTC is a shitfork worth about $2. Maybe that confused him?

It would be damning if bitcoins on LN don't trade 1:1 (or at least close to it) against bitcoin, because that would impede people from moving their bitcoins to it.

If anyone's willing do to a different exchange rate in either direction, I'm totally okay paying half price for their LN or on-chain

[OgNasty]

Why isn't this thread in the altcoin section?  Can anyone make a shitcoin fork and tie it to Bitcoin's blockchain and be able to post wherever they want on the forum or is this something reserved only for the Core development team?

I'm just curious at the politics that are behind the lightning network getting an altcoin pass while it's supporters call other projects shitcoins...  What about this shitcoin has some Bitcoin supporters so willing to look the other way?  I'm genuinely curious. 

[JayJuanGee]

Why isn't this thread in the altcoin section?  Can anyone make a shitcoin fork and tie it to Bitcoin's blockchain and be able to post wherever they want on the forum or is this something reserved only for the Core development team?

I'm just curious at the politics that are behind the lightning network getting an altcoin pass while it's supporters call other projects shitcoins...  What about this shitcoin has some Bitcoin supporters so willing to look the other way?  I'm genuinely curious.  

I don't claim to be any kind of expert in terms of what is a shitcoin and what is not (and even worse when it comes to overviewing what topics go in which sections of the forum), but on the idea of whether lightning network is a shitcoin, that seems so 2017/2018 or perhaps there might have been some recent valid assertions that did not get significantly and sufficiently rebutted in recent times.

Anyhow, it seems to me that even if there are some implementation difficulties with lightning over the past few years, through lightning network, there is no attempt to print some kind of token separate from bitcoin.. so merely attempting to improve bitcoin's liquidity through second-layer solutions, such as lightning network does not even seem close to what various shitcoins (I think that you were referring to them as alts) are doing and have been doing..  

Shitcoins, such as ethereum and its various scam projects such as ICOs and DEFI (and cannot forget about the shitty NFT scams), the various bcashes and/or other shitcoins with their own blocks are not generally building on bitcoin but attempting to build their own ecosystem that is separate from bitcoin but rides off of bitcoins security, good will and good name to scam or deceive people, even if some of them might some day either get absorbed into bitcoin or have some kind of useful complement to bitcoin that might end up serving on as a second layer.  

I cannot think of any shitcoin whether we are referring to any of the bcashes or their related projects or Ethereum or any shit built in connection with it whether ICOs, or the current shits of the day that are called DEFI and/or NFTs, that currently is even close to having some bitcoin complements that would thereby allow them to NOT be put in the alt coin section..

but I hardly even know what various altcoin (shitcoin) threads on the forum are because I generally avoid those kinds of various non-bitcoin topics on the forum (because I do not want to fill my head up with distracting bullshit and more nonsense than my head is already tending to be filled with) except I don't really mind bashing various shitcoins and non-bitcoin related projects, scams and issues when they come up in various bitcoin related threads and present themselves as if they are either similar to bitcoin or better than bitcoin or used as a vehicle to naysay bitcoin (suggesting that they cure some assumed bitcoin defects.. blah blah blah), when I am in the mood or have time for such bashenings towards such non-bitcoin projects that bleed into bitcoin threads on a fairly regular basis...  

[TangentC]

Why isn't this thread in the altcoin section?  Can anyone make a shitcoin fork and tie it to Bitcoin's blockchain and be able to post wherever they want on the forum or is this something reserved only for the Core development team?

I'm just curious at the politics that are behind the lightning network getting an altcoin pass while it's supporters call other projects shitcoins...  What about this shitcoin has some Bitcoin supporters so willing to look the other way?  I'm genuinely curious.  

You have a valid point, any discussions related to 3rd party offchain systems should be in a separate topic.

Lightning Network & Liquid, and any other offchain systems should not be considered as bitcoin, IMO.
Just as any Exchange's separate offchain database is excluded from discussion here , so too should other 3rd party offchain networks.
They should have their own separate topics to avoid confusion,
but as you mentioned earlier, Politics does seem to be determining the outcomes here instead of logic.

[Timelord2067]

Another 24 hours went by and still no inbound channels were created, so I sent via LN (from a secondary LN source) ~2,500 sats bringing the balance just above 902,000 sats.  But no secondary LN channel was forthcoming.

In my experience, the inbound capacity occurred instantly when the channel was opened. It would have been interesting to see what happens if you sent more than 3,750 to the wallet. I would expect Phoenix to open another channel, but haven't tried that from a LN deposit yet.

Just for a laugh I sent 500,000 sats via LN from my Eclair (mobile phone) wallet to the Phoenix (Tablet) wallet in one TX costing 51 sats.  The original 1,000,000 on chain TX cost ~7,250 sats so it's a stark contrast in TX fees for on-chain Vs off chain.  (I haven't tweeked any TX request fees on either device).

As we supposed, a new channel was created in under two minutes with an outbound figure of 499,000 sats (1,000 sat fee to open a new channel) and an inbound component of ~ 239,000 sats.

So...

I have 1,501,000 sats OUTBOUND capacity in my Phoenix Wallet with three channels open and ~ 455,000 sats INBOUND capacity combined.


Now all I have to do is find venues around Brisbane that accept BTC either on or off chain and test out transactions in a real world setting which is something I've been meaning to do for quite a long time now.

[ABCbits]

Why isn't this thread in the altcoin section?

Because this thread actually about LN for Bitcoin (although LN support many cryptocurrency) and some parts of LN directly involve Bitcoin network (such as HTLC script used to open and close channel).

You have a valid point, any discussions related to 3rd party offchain systems should be in a separate topic.

Lightning Network & Liquid, and any other offchain systems should not be considered as bitcoin, IMO.
Just as any Exchange's separate offchain database is excluded from discussion here , so too should other 3rd party offchain networks.

While Lightning Network is off-chain system, IMO it can't be categorized as 3rd party since it's possible user have control over their Bitcoin.

[JayJuanGee]

Why isn't this thread in the altcoin section?  Can anyone make a shitcoin fork and tie it to Bitcoin's blockchain and be able to post wherever they want on the forum or is this something reserved only for the Core development team?

I'm just curious at the politics that are behind the lightning network getting an altcoin pass while it's supporters call other projects shitcoins...  What about this shitcoin has some Bitcoin supporters so willing to look the other way?  I'm genuinely curious.  

You have a valid point, any discussions related to 3rd party offchain systems should be in a separate topic.

Lightning Network & Liquid, and any other offchain systems should not be considered as bitcoin, IMO.
Just as any Exchange's separate offchain database is excluded from discussion here , so too should other 3rd party offchain networks.
They should have their own separate topics to avoid confusion,
but as you mentioned earlier, Politics does seem to be determining the outcomes here instead of logic.

You seem to be arguing the exact opposite of what you are proclaiming to want to achieve in your labelling the decision regarding what is separate from bitcoin and what is connected to bitcoin as politics rather than logic.

In that respect, to cause separate sections for bitcoin related projects by proclaiming them NOT sufficiently connected to bitcoin (on chain blah blah blah) would seem to be a political decision rather than a logical one.. for some of the reasons that have already been asserted in responses from ETFbitcoin and mine.

[TangentC]

Why isn't this thread in the altcoin section?

Because this thread actually about LN for Bitcoin (although LN support many cryptocurrency) and some parts of LN directly involve Bitcoin network (such as HTLC script used to open and close channel).

You have a valid point, any discussions related to 3rd party offchain systems should be in a separate topic.

Lightning Network & Liquid, and any other offchain systems should not be considered as bitcoin, IMO.
Just as any Exchange's separate offchain database is excluded from discussion here , so too should other 3rd party offchain networks.

While Lightning Network is off-chain system, IMO it can't be categorized as 3rd party since it's possible user have control over their Bitcoin.

Then what in your opinion is the difference
between Lightning Network and Liquid Network?

Why is the Liquid network FAQ topic not included?

Plus if Coinbase gives access to the user's bitcoin private keys, does that not invalidate your argument about control over bitcoin,
and thusly now elevate Coinbase offchain system to a required topic in this forum.

Will questions regarding Litecoin/LN now also be answered in these topics, since LN also supports litecoin?

LN & Liquid may use segwit / locking features of bitcoin program code, but their own code development is separate ,
therefore, I have no choice but to consider them 3rd party.

I don't claim to be any kind of expert
 blah blah blah

Sorry, all I got from your posts , were you are not an expert.

To avoid derailing this topic, I will make no further posts about this,
I am looking forward to ETFBitcoin response to the above questions.
JayJuanGee , if you have more blah, don't waste it on a post, just pm me and we'll see if communication is even possible.
Although blah is not a language , I am fluent in.  

[Timelord2067]

LN & Liquid may use segwit / locking features of bitcoin program code, but their own code development is separate ,
therefore, I have no choice but to consider them 3rd party.

If people abandoned Core Wallets in favour of other forms of wallets for their bitcoins (such as gee, I dunno... a Lightning Wallet for example) then would that mean consensus has been reached and the LN is actually how bitcoin evolved?

Core is not the only type of bitcoin wallet out there.

[dkbit98]

Why isn't this thread in the altcoin section?  Can anyone make a shitcoin fork and tie it to Bitcoin's blockchain and be able to post wherever they want on the forum or is this something reserved only for the Core development team?

I don't think that Lightning Network for Bitcoin should be in altcoins section but maybe we need to have new section for this and not use Development & Technical Discussion .

Anyway, did anyone noticed that number of active Bitcoin Lightning Nodes jumped over 10,400 and that is almost double than in same time last year, and I think it's just getting started.


https://bitcoinvisuals.com/ln-nodes

[ABCbits]

Then what in your opinion is the difference
between Lightning Network and Liquid Network?

Why is the Liquid network FAQ topic not included?

No comment, i don't know much technical detail of Liquid Network.

Plus if Coinbase gives access to the user's bitcoin private keys, does that not invalidate your argument about control over bitcoin,
and thusly now elevate Coinbase offchain system to a required topic in this forum.

If Coinbase gives access to the user's bitcoin private keys and open-sourcing their software or share full protocol specification, i don't mind such topic.
For example, how Coinbase make batch transaction and implement queue user's outoing transaction might be interesting discussion.

Will questions regarding Litecoin/LN now also be answered in these topics, since LN also supports litecoin?

Someone might answer such question. But if you actually mean "Should " (rather than "Will"), it depends whether the question also can be applied to Bitcoin on LN.

Besides, there are many thread which mainly not about Bitcoin, but still on "Development & Technical Discussion" board. Some examples from current first page,

• How to create your own Cryptocurrency?
• Ways to accelerate 256-bit arithmetic with 64-bit ops?
• Is there secp25k1 for the cuda api on C ++?
• Playing cards with ECDSA and HD wallets
• How many of you check the code of open source software?
• PSA: Coders making ad hoc “random” schemes are like kids playing with matches.

LN & Liquid may use segwit / locking features of bitcoin program code, but their own code development is separate ,
therefore, I have no choice but to consider them 3rd party.

Looks like term "third party" have different meaning to us.

[Rath_]

Then what in your opinion is the difference
between Lightning Network and Liquid Network?

Liquid Network is fundamentally different from the Lightning Network.

Liquid Network cannot work without third-party. You can exchange BTC to L-BTC on your own, but you won't be able to convert it back without Liquid Federation member's help. Liquid Network transactions are not instantaneous. Every minute, a new block is generated by one of the Functionaries and signed by the majority of other Functionaries. Functionaries are selected among the members of the Liquid Federation.
 
The Lightning Network on the other hand, does not suffer from many of the Liquid Network's problems. All you need to open and close a channel is a simple on-chain transaction. Funds are held in a 2-of-2 multisig address unlike Liquid Network where funds are stored in a 11-of-15 multisig address controlled by Liquid Network's Watchmen. The number of required confirmations before a channel becomes active is fully customizable while Liquid Network requires 102 confirmations before L-BTC is credited.

As for the Lightning transactions, HTLCs are used for trustless payment settlement. Every time a balance of the channel is updated, a new commitment transaction is signed to ensure that the current channel balance can be enforced on-chain. When that happens, sub-satoshi values are rounded down and outputs below the dust limit are added to the transaction fee. As of right now, subsatoshis are negligible values, which in my opinion can be discarded. It won't be a problem anymore if some day there is a hard-fork changing the maximum number of decimal places.

I think there are only two situations when some trust is involved. The first one is when you have milisatoshis and you really care about them. As long as the channel is open, you can spend them. The other one is when your node goes offline for some reason which means that the other party can broadcast an old commitment transaction. You can freely set the amount of time which the other party must wait before the transaction can be included in a block after it was broadcast. Most nodes will accept timelocks up to 2046 blocks (~2 weeks), so it shouldn't be really a problem. I could mention watchtowers here, but they are obviously a third-party.

Having said all of that, I believe that the Lightning Network cannot be called a third-party off-chain system, especially if you compare it to Liquid Network.

Why is the Liquid network FAQ topic not included?

I don't recall ever seeing such a thread. That could be one of the reasons why it is not in this section. A separate board for second layer software would be probably the best solution.

[DooMAD]

Why is the Liquid network FAQ topic not included?

Further to Rath's excellent post, I'd imagine it's largely due to who the users of Liquid primarily are.  The average person is unlikely to engage with Liquid directly.  It seems to be oriented more towards businesses.  If the companies you frequently deal with are relying on FAQs on an Internet forum, I'd have some concerns.  They should already know what they're doing.

I suppose such a topic might conceivably be useful for someone looking to start a business, as everyone needs to begin somewhere, but the guide would basically consist of "go to this gatekeeper and follow their instructions".  There's not much more information most of us here can provide unless any of us happen to be involved with one of the companies that use it.