Opinions on Phoenix Wallet?

[mk4]

Curious on your opinions on Phoenix Wallet[1]. While it's definitely not the best in a privacy perspective, I think it's probably the best noob-friendly(and when I meant noob, I meant literally tech illiterate) lightning wallet we have right now.

Besides privacy and a small cut they take with fees, I don't see any downside. Is there some thing I don't see? Is there any reason why we should not be recommending this wallet to the public(not the best recommendation I know, but for the people who aren't capable of learning to use wallets like Breez/BlueWallet etc)? Feel free to call me dumb if there's something I don't see.

Link to their faq: https://phoenix.acinq.co/faq

Disclaimer: I'm not affiliated with this wallet. Just genuinely curious.

[1] https://phoenix.acinq.co/

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[pooya87]

it relies a lot on their servers which adds a level of centralization to this wallet and i never like it when the "wallet" is taking fees whenever the user wants to send coins even though it is very small. there are some trade-offs but they are at least very transparent about it so that is a good sign.
the wallet is also open source and can be compiled and run from the source code instead of downloading it from google play which is another positive sign.

all in all i think it is a good LN wallet but i still think there isn't any "best" LN wallets available yet.

[PrimeNumber7]

It looks like the end-user must send bitcoin to the devs(?) of the wallet software in order to have funds in your LN channel.

It is also unclear how your wallet will know the appropriate channel state if you have to restore from the seed, based on their FAQ.

From what I can tell, you are only connecting to the Phoenix Wallet LN nodes via LN, so all of your payments would need to route through them. They are already taking a fee to send/receive transactions, but their LN nodes could connect to other intermediary LN nodes they control to take additional, undisclosed fees.

I think a better setup for mobile wallets would be for the wallet to connect to a server, such as your home computer that will act as a LN node, and the wallet will instruct the server to send a LN payment or generate a LN invoice, and provide the invoice to the phone so it can display it to the end user. The server would handle things such as blockchain monitoring, and backups during every transaction.

[mk4]

it relies a lot on their servers which adds a level of centralization to this wallet and i never like it when the "wallet" is taking fees whenever the user wants to send coins even though it is very small.

Yep. Probably a reasonable amount of fee since they do the channel handling I guess? Percentage based fees can suck but I guess lightning is mostly for smaller transactions anyway.

all in all i think it is a good LN wallet but i still think there isn't any "best" LN wallets available yet.

Definitely not the best as it's mostly subjective, but I'd say it's the easiest at the moment as far as I know.

From what I can tell, you are only connecting to the Phoenix Wallet LN nodes via LN, so all of your payments would need to route through them.

I think a better setup for mobile wallets would be for the wallet to connect to a server, such as your home computer that will act as a LN node, and the wallet will instruct the server to send a LN payment or generate a LN invoice, and provide the invoice to the phone so it can display it to the end user. The server would handle things such as blockchain monitoring, and backups during every transaction.

No doubt the fees and privacy is a downside. But I guess these are the sacrifices for having an ultra mega nooby friendly service, as so the user doesn't need to care about nodes and servers and such, just easily make LN transactions almost like doing on-chain transactions. What do you think? Are there possible ways of handling things without sacrificing ease-of-use?

[mk4]

Not fully trustless, which mentioned on their FAQ page.

Well yes, I guess doing it through Phoenix is less trustless than doing it through other Lightning wallets. But I guess it's sensible though as chances are people are going to use it for smaller transactions anyway, and it's in exchange for far easier usability. Probably a risk:reward that's worth it.

^Most probably a controversial opinion but yea. LOL

[PrimeNumber7]

No doubt the fees and privacy is a downside.

I don't necessarily have an issue with the fees. They are high by bitcoin standards, but low when compared to using a credit card. My concern is more that the wallet could charge fees higher than what is advertised via intermediary LN nodes. 

But I guess these are the sacrifices for having an ultra mega nooby friendly service, as so the user doesn't need to care about nodes and servers and such, just easily make LN transactions almost like doing on-chain transactions. What do you think? Are there possible ways of handling things without sacrificing ease-of-use?

I do see LN wallets in the future that are user friendly. I would predict we will see user-friendly desktop LN wallets before mobile wallets because coding mobile software is somewhat more complex than desktop software, and mobile OS will restrict what apps can do more than what macOS and Windows.

Over the long term, I would predict there are a handful of fairly large LN node operators that most end users will connect to, and will compete with, and connect to each other. The topology would somewhat resemble that of airport routes, but with many more routes.

With the above being said, I would envision future wallets LN wallets to connect to nodes with some kind of standardized URI that is unique to LN. I think most users will need to connect to one of the major hubs, and those that connect to multiple hubs will force each hub to compete on price. Something similar to what Phoenix does, except the user can choose which nodes to connect to.

I think LN wallets will use seeds, similar to what Phoenix uses, but will also automatically backup channel states to cloud storage during and after each transaction. This is important because without this, if you lose access to your wallet file, you will have no way to protect yourself against your counterparty from closing a channel using an old closing transaction.

Unfortunately, none of the above involves the creator of the software earning any kind of income.

[LoyceV]

I've installed Phoenix wallet, and could receive a few sat from BlueWallet just fine. However, even 15 sat doesn't work:

Code:

Payment failed. Does the receiver have enough inbound capacity?

If I send from BlueWallet to Lightning-Roulette and from there to Phoenix, it works fine. I've had similar problems with Eclair (connected to Acinq): BlueWallet is usually better connected than using my own channels.

I am a bit surprised by the design choices they made: When I receive just a few sat, the Phoenix guys open a channel for me, and pay the on-chain transaction fees! On-chain transaction fees are currently very low, but it's still 246 sat, which is considerably more than the few sat I deposited. If I would close the channel, the Phoenix guys will lose money on it again. Their fees are really low so I hope this will be a profitable business model in the long run.

If everything works as they say it does, I'm quite impressed! It is indeed much easier than opening my own channels in Eclair.
However, it leads to many questions: right after my first incoming LN transaction, Phoenix opened the channel. But the channel isn't instantly confirmed, but it already allows me to make LN transactions. I have no idea how they pull that off.
Phoenix says the 12 seed words are enough to restore the wallet, that means they somehow link my open LN channel to those seed words (because the wallet is not custodial). Here too, I have no idea how they pull that off. For small amounts I'm totally fine trusting them, but for larger amounts it would be a good test to see if I can restore my channel in another application (again: I have no idea how).

[mk4]

*snip*

Yea, I wouldn't put larger amounts of money on any other mobile wallet either. I was also shocked on how seamless it is! It's so underrated in my opinion. Unfortunately they don't have an iOS app yet(which a lot of people use). Are you personally fine with recommending this to people as a hot wallet? Because I think I do.

[LoyceV]

Are you personally fine with recommending this to people as a hot wallet?

It depends: I don't trust the app (like most apps), so I wouldn't recommend installing it on a device that's in use for serious things. I've installed it on a tablet, and now that I think about it, the tablet holds some crypto already so it's not the best choice. But I'm running out of devices for testing
Apart from that, I'd recommend not only installing Phoenix, but testing several wallets and choosing on your own which you like most. These are the ones I've tested on Android:

• BlueWallet (custodial LN, non-custodial on-chain)
• Eclair (non-custodial LN, non-custodial on-chain
• Wallet of Satoshi (custodial LN)
• Mycelium (non-custodial on-chain)
• Coinomi (non-custodial on-chain, also many altcoins and some Forkcoins)
• Electrum (non-custodial on-chain)
• Bither/bitpie (I used this for low-value Forkcoins but nowadays it mostly crashes when I try that)

The usual disclaimer applies: "never send more than you're willing to lose", especially when using LN. But by all means, throw a few bucks tens of thousands of satoshis at it, and try it. Send from your LN-wallet, to a LN-casino to, to your other wallet, to another LN-casino and back to another one of your wallets. You can do all this in less than a minute, which is just amazing.

As for easy LN, I think BlueWallet and Phoenix both have their use case. I've been using BlueWallet a lot longer, so I'd like to know how you think they compare.

[pomo99]

Phoenix says the 12 seed words are enough to restore the wallet, that means they somehow link my open LN channel to those seed words (because the wallet is not custodial).

Each time channels are updated, Phoenix sends an encrypted version of their data to its peer. This allows for easy backup/restore of channels while maintaining privacy.

[LoyceV]

Each time channels are updated, Phoenix sends an encrypted version of their data to its peer. This allows for easy backup/restore of channels while maintaining privacy.

Thanks for that! A tip though: you should use proper quote-tags on Bitcointalk, as this forum is very strict on plagiarism. If you didn't type it, add quote tags I've edited my quote of your quote to fix this.
And welcome to Bitcointalk!

I'd say the fact that restoring from seed requires trust should be added here:

The following operations require trust:

•     channel opening (until the funding tx is confirmed)
•     swaps (you pay upfront, and then our node does the swap)

[LoyceV]

This topic deserves a bump I've been using Phoenix Wallet a bit more lately, and I'm quite happy with how well-connected it is. I get more failed payments on BlueWallet than on Phoenix Wallet now, and Phoenix charges less fees. I paid around 0.01% fee on a 80,000 sat payment from Phoenix Wallet, while this would be a minimum of 0.3% on BlueWallet.

BlueWallet doesn't charge anything for on-chain deposits, Phoenix charges 0.1%. But that amount is even lower than the minimum BlueWallet charges to send funds out using LN, so Phoenix is cheaper in the end.
I wonder how they'll turn a profit though: 0.1% of a small deposit isn't even enough to cover the fees to open a channel, and each new on-chain deposit creates a new channel.

I was also happily surprised that I can use funds from multiple channels to make one payment that's larger than any individual channel could afford. I have no idea how they arrange that internally, but it works!

[Rath_]

I was also happily surprised that I can use funds from multiple channels to make one payment that's larger than any individual channel could afford. I have no idea how they arrange that internally, but it works!

Isn't it just a proper implementation of multi-part payments? It should not matter if all parts (HTLCs) are sent from the same channel; all of them must use the same payment hash.

By the way, an iOS version is supposed to be released in Q1 2021.

[LoyceV]

Isn't it just a proper implementation of multi-part payments? It should not matter if all parts (HTLCs) are sent from the same channel; all of them must use the same payment hash.

I hope so, that sounds good! Either way, I like it

[PrimeNumber7]

This topic deserves a bump I've been using Phoenix Wallet a bit more lately, and I'm quite happy with how well-connected it is. I get more failed payments on BlueWallet than on Phoenix Wallet now, and Phoenix charges less fees. I paid around 0.01% fee on a 80,000 sat payment from Phoenix Wallet, while this would be a minimum of 0.3% on BlueWallet.

BlueWallet doesn't charge anything for on-chain deposits, Phoenix charges 0.1%. But that amount is even lower than the minimum BlueWallet charges to send funds out using LN, so Phoenix is cheaper in the end.
I wonder how they'll turn a profit though: 0.1% of a small deposit isn't even enough to cover the fees to open a channel, and each new on-chain deposit creates a new channel.

BlueWallet is a custodial wallet, while Phoenix Wallet is not. Making a deposit to BlueWallet is sending coin to a service that is crediting your account while sending coin to Phoenix Wallet is actually opening a LN channel with a percentage of your 'deposit' going to Phoenix.

[LoyceV]

This is new: after receiving an on-chain transaction on Phoenix Wallet, it shows a popup:

Code:

Bitcoin mempool is full and fees are high.
SEE HOW PHOENIX IS AFFECTED

Clicking the link shows that "channel opening/closing can be slow to confirm."

Meanwhile, Phoenix doesn't show a channel being opened, it shortly showed a new channel as "closed", but that one disappeared. On-chain I can see my transaction is split up into several other transactions already, each with 12 sat/vbyte fee. This was the largest deposit I've sent into LN so far, and channel opening is custodial. I don't know if a channel was opened for me, but if it's with 12 sat/vbyte, it's going to take a while.
I'm slightly disappointed Phoenix wallet didn't show this when I created the deposit address, or just increased their fee for opening a channel.

[vipuljainism]

Feels like the project is about to close
Prob restore it somewhere else on send to a different one

[LoyceV]

Feels like the project is about to close

ACINQ has been around for years. It's much more likely they try to grow and earn billions from an IPO in the future.

Prob restore it somewhere else on send to a different one

Opening a new LN channel is custodial in Phoenix Wallet. That means you have to wait for it to open before doing anything else.

Meanwhile, Phoenix doesn't show a channel being opened, it shortly showed a new channel as "closed", but that one disappeared. On-chain I can see my transaction is split up into several other transactions already, each with 12 sat/vbyte fee (which is still more than the total fee ACINQ took from my deposit). This was the largest deposit I've sent into LN so far, and channel opening is custodial. I don't know if a channel was opened for me, but if it's with 12 sat/vbyte, it's going to take a while.

Update: I have an open channel! It was opened (with 13 sat/vbyte) a few hours after my deposit confirmed, and a couple hours later the channel and balance became available to me. Here's the interesting part: The on-chain transaction opening the channel isn't confirmed yet! As far as I know, that's not even possible
So, and I'm slightly speculating here, this would mean ACINQ accepts LN-funds coming out of a LN-channel that's not confirmed on-chain yet. Because they're the ones who opened the channel, they can be sure it's not going to be double spent at some point and will confirm eventually. And I also expect their own hub to have confirmed channels with third parties, so third parties aren't dealing with an unconfirmed channel. So far so good, I am quite happy I don't have to wait (weeks?) for this transaction to confirm. But I'm not sure if this means the channel is now more or less custodial: if I try to close the channel, the opening transaction still has to confirm.

Update (6 days later): the transaction that opened my LN channel got confirmed. All this time I've been using Phoenix Wallet without problems.

[mk4]

*snip*

Not sure if I'm following this correctly, but are they pretty much shouldering an unconfirmed transaction(at least temporarily) and taking a small risk just for a better experience for the end user? If so, though I'm not sure what the risks are for the user, but they seem to be doing the 'lightning for beginners' aspect really really well.

[LoyceV]

Not sure if I'm following this correctly, but are they pretty much shouldering an unconfirmed transaction(at least temporarily) and taking a small risk just for a better experience for the end user?

Yep! I don't think there's risk in it for them though, they own the channel opening transaction.

If so, though I'm not sure what the risks are for the user, but they seem to be doing the 'lightning for beginners' aspect really really well.

True. But the risk is for the user: in a way the current channel is still custodial. I'll give them the benefit of the doubt though: it works just fine!