Opinions on Phoenix Wallet?

[Pmalek]

The fees you used to open the channel were quite low. Even two ago days when you made that transaction, 13 sat/vByte looks like a fee that would have below the purging limit. What if your opening transaction gets purged from the mempool? We are currently at a 18-19 sats purging threshold. Did your on-chain transaction confirm in the meantime? Are you able to use the channel for outgoing payments already?

[1714509293]

1714509293

[LoyceV]

The fees you used to open the channel were quite low.

That's not how Phoenix Wallet works: I didn't open the channel, ACINQ did!

Even two days when you made that transaction, 13 sat/vByte looks like a fee that would have below the purging limit. What if your opening transaction gets purged from the mempool?

They'll just keep broadcasting it until it confirms.

We are currently at a 18-19 sats purging threshold. Did your on-chain transaction confirm in the meantime? Are you able to use the channel for outgoing payments already?

Blockchair still knows the transaction, it's not confirmed, and I can just make outgoing payments

[Pmalek]

Blockchair still knows the transaction, it's not confirmed, and I can just make outgoing payments

Do you feel like that opens the door for scams? Theoretically, you make a deal with someone where that person sends you cash or another crypto via an on-chain transaction, and you send him a payment via the LN where the on-chain fees are way too low. Do they mention in their documentation what are the minimum required fees, is there a minimum? Any mention how long the on-chain transaction will be broadcasted until it's finally dropped, if ever?

Maybe my logic is a bit of here. 

[LoyceV]

Do you feel like that opens the door for scams?

If ACINQ wanted to scam me, they would have done it by now.

~, and you send him a payment via the LN where the on-chain fees are way too low.

Their LN-wallet isn't directly connected to my unconfirmed channel, they're connected to the ACINQ node (with possibly more nodes in between), and I'm pretty sure all those nodes won't accept a LN-transaction from a channel that isn't confirmed on-chain.

[kjlimo]

LoyceV, thanks for sharing your experience! I'm curious can that transaction be included in a future transaction with a fee high enough to get it confirmed quicker (if they were to ever "need" that)?

I've submitted transactions with fees that are too low and just sit there unconfirmed. I don't personally know how to bump those fees, but I feel like I've read or heard about that being an option.

I'm thinking these are two things that could be part of why you're able to use your Lightning Network channel and "they" aren't too worried about it.

Phoenix has been my lightning network wallet of choice due to low fee experience. The only issue with using the lightning network is when I have to load my wallet, but if I can lower the fees for loading my wallet and still be able to send payments to folks, that's even better.

While I understand it's theoretically possible to scam someone, I'm not sure how practical it is and how possible it would be for someone like me to even accomplish that, so I'm thinking more likely, as long as someone isn't in a hurry for the funds, they can let it sit there until perhaps they even pay a miner a boost to process that transaction in their next block. I would think that could be another way to accomplish this, but not sure whether services like that are actually set up at this point in time.

[LoyceV]

LoyceV, thanks for sharing your experience! I'm curious can that transaction be included in a future transaction with a fee high enough to get it confirmed quicker (if they were to ever "need" that)?

No. Changing the fee changes the transaction, which means it's a new channel and the current channel disappears.

I've submitted transactions with fees that are too low and just sit there unconfirmed. I don't personally know how to bump those fees, but I feel like I've read or heard about that being an option.

ViaBTC's transaction accelerator is the only one I know of that works (minimum fee is 10 sat/byte (not vbyte)).

The only issue with using the lightning network is when I have to load my wallet, but if I can lower the fees for loading my wallet and still be able to send payments to folks, that's even better.

Your funding transaction needs to have a high enough fee to get confirmed before the channel is opened.

[PrimeNumber7]

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.

If I am understanding correctly, you sent coin to ACINQ, and upon this transaction confirming, they opened a LN channel with you that involves you having outbound capacity in the amount of the coin you sent (less any fees they are charging you), and possibly some inbound capacity for you.

If this is true, there is no risk to ACINQ because your "deposit" has already confirmed. Allowing a LN transaction to be processed when the opening transaction is unconfirmed is opening up risk to the counterparty to the channel only, and no one else in the LN network. This is probably a setting that should be set to "disable" by default though.

[LoyceV]

If I am understanding correctly, you sent coin to ACINQ, and upon this transaction confirming, they opened a LN channel with you that involves you having outbound capacity in the amount of the coin you sent (less any fees they are charging you), and possibly some inbound capacity for you.

All correct!

If this is true, there is no risk to ACINQ because your "deposit" has already confirmed. Allowing a LN transaction to be processed when the opening transaction is unconfirmed is opening up risk to the counterparty to the channel only, and no one else in the LN network. This is probably a setting that should be set to "disable" by default though.

At first, I was very disappointed they opened a channel with such a low fee.
When I found out I could just use the channel, I was pleasantly surprised. Even though it's more or less custodial until the channel got confirmed, from a user's perspective it's very convenient.

On PhoenixWallet's Telegram channel, I read they disallowed opening channels for new users for a while. High on-chain fees don't really work with chain-related LN actions.

[PrimeNumber7]

If I am understanding correctly, you sent coin to ACINQ, and upon this transaction confirming, they opened a LN channel with you that involves you having outbound capacity in the amount of the coin you sent (less any fees they are charging you), and possibly some inbound capacity for you.

All correct!

If this is true, there is no risk to ACINQ because your "deposit" has already confirmed. Allowing a LN transaction to be processed when the opening transaction is unconfirmed is opening up risk to the counterparty to the channel only, and no one else in the LN network. This is probably a setting that should be set to "disable" by default though.

At first, I was very disappointed they opened a channel with such a low fee.
When I found out I could just use the channel, I was pleasantly surprised. Even though it's more or less custodial until the channel got confirmed, from a user's perspective it's very convenient.

If you are sending them coin in advance, you are giving them custody of your coin before they open a LN channel. This is true regardless of if they open a channel with a fee of 1 sat/vByte, or 10000 sat/vByte. I assume they are taking the fee out of your channel balance, so it will be beneficial for you to have the fee they pay on the funding transaction be lower.

I think in the future, it would be more common for channels to be funded via both parties sending coin in the same transaction.

[LoyceV]

I assume they are taking the fee out of your channel balance, so it will be beneficial for you to have the fee they pay on the funding transaction be lower.

The fee is 0.1%, with a 1000 sat minimum. I paid 1000 sat, ACINQ paid almost double that amount to open the channel.

I think in the future, it would be more common for channels to be funded via both parties sending coin in the same transaction.

More inputs means higher total transaction fees. I can imagine a future in which for LN users don't open their own channels at all: you just buy LN balance at an exchange, the exchange opens large channels, and you use their channels for buying coffee.
I know some people won't like that level of centralization, and I'm not a huge fan of it myself, but if that's what it takes to reach mass adoption, I can live with it. And if you really want, you can always pay the additional on-chain fees to connect your own node.

I saw estimates of exchanges holding a couple hundred billion dollars worth of crypto. Adding a few bucks for custodial coffee payments shouldn't be a problem.

[Pmalek]

Do you feel like that opens the door for scams?

If ACINQ wanted to scam me, they would have done it by now.

I see now where my logic failed me. I overlooked your post from April 19 where you wrote that the on-chain transaction of 13 sat/vByte sent to your Phoenix Wallet was confirmed. After that, ACINQ opened the channel. I thought that the channel was opened before your transactions to Phoenix Wallet got confirmed. That's why I asked about the possibility to scam someone over the LN by double-spending the initial deposit to Phoenix Wallet before it confirms.

Now it's all clear, thanks!

[LoyceV]

The fee is 0.1%, with a 1000 sat minimum. I paid 1000 sat, ACINQ paid almost double that amount to open the channel.

There's an update from Phoenix Wallet:

In the short term we are raising fees to 1% for channel creation. It better reflects current network conditions.

Longer term, we plan to make those fees dynamic to take advantage of low fees periods. In the meantime, we will be more conservative and focus on sustainability.

Mind the minimum fee:

1% of the amount received, with a 3000 sat minimum fee. This covers the cost of opening a channel. The amount received must be at least 10 000 sat.

This makes sense, it's obvious they were paying more for opening channels than they earned from it.

Depositing 0.01 BTC into Phoenix Wallet will now get you 0.0099 BTC in a LN channel. That's about $5.60 fee on a $560 channel. If you make many payments, it's still a lot cheaper than on-chain transactions.

[PrimeNumber7]

I think in the future, it would be more common for channels to be funded via both parties sending coin in the same transaction.

More inputs means higher total transaction fees.

In your situation, there are two transactions, 1) tx from you to ACINQ, and from ACINQ that opens the LN channel. This is at a minimum, two inputs and two outputs, plus additional bytes that are required for each transaction. Two parties sending coin to fund a LN channel in the same transaction would involve a single transaction, and a minimum of one output and two inputs. The net effect is that less block space would be used.

I can imagine a future in which for LN users don't open their own channels at all: you just buy LN balance at an exchange, the exchange opens large channels, and you use their channels for buying coffee.
I know some people won't like that level of centralization, and I'm not a huge fan of it myself, but if that's what it takes to reach mass adoption, I can live with it. And if you really want, you can always pay the additional on-chain fees to connect your own node.

If you are buying a LN 'balance you are buying a database entry. If the exchange has many customers and merchants, there would be no reason to use LN, you could simply pay another exchange customer, and the database could be updated.

[LoyceV]

I can imagine a future in which for LN users don't open their own channels at all: you just buy LN balance at an exchange, the exchange opens large channels, and you use their channels for buying coffee.
I know some people won't like that level of centralization, and I'm not a huge fan of it myself, but if that's what it takes to reach mass adoption, I can live with it. And if you really want, you can always pay the additional on-chain fees to connect your own node.

If you are buying a LN 'balance you are buying a database entry. If the exchange has many customers and merchants, there would be no reason to use LN, you could simply pay another exchange customer, and the database could be updated.

I wouldn't like the scenario in which everyone relies on the same exchange. If there are (say) 20 large parties offering LN "wallets", 95% of my transactions would be to users who use a different exchange. It may be just a database entry at the exchange I'm using, but they'll need to make an actual LN-transaction to the other party every time I make the payment.
Kinda like BlueWallet does already.

[cygan]

i didn't want to create a new thread for my problem and am now asking my question in this one
i installed the Phoenix wallet on my android mobile phone yesterday and wanted to receive the very first transaction.
but this is canceled due to the fees i set of max. 5000 sats - the message says that the fee is almost 20k sats and i could change that in my settings
what am i doing wrong or is that really the case? to be honest, i can't imagine it, otherwise i can immediately claim an on-chain transaction

[LoyceV]

i installed the Phoenix wallet on my android mobile phone yesterday and wanted to receive the very first transaction.
but this is canceled due to the fees i set of max. 5000 sats - the message says that the fee is almost 20k sats and i could change that in my settings

See:

Receiving on-chain (swap-in or Lightning with insufficient liquidity): mining fees (+ 1000 sat one time)

Considering how high on-chain fees are at the moment, 20k sats seems correct.

otherwise i can immediately claim an on-chain transaction

That's true. But on-chain you'll pay that for each transaction, and with LN only for the first transaction (as long as you have enough liquidity).
Or just use a custodial LN wallet (for small amounts), so you don't have any on-chain costs.

I still have a few open channels in Phoenix Wallet (created years ago, when on-chain fees were much lower).
Those channels are almost empty, but have receiving liquidity. There's no point for Phoenix Wallet to close them, as it would only cost them transaction fees. I still have 2 seed phrases from different installations, and I think I have a total of 4 open channels.

Android on my old phone is too old to update Phoenix Wallet, and I don't want to install more wallets on my regular phone.

[cygan]

✂
That's true. But on-chain you'll pay that for each transaction, and with LN only for the first transaction (as long as you have enough liquidity).
Or just use a custodial LN wallet (for small amounts), so you don't have any on-chain costs.
✂

so do i understand correctly that these high fees are only charged for the first transaction that my Phoenix wallet receives and from the second transaction onwards everything is in cents (if my wallet is filled with satoshis)?
i tried the same thing with another wallet (wos) and it doesn't matter whether it's the first or fifth transaction - the fees were in the cent range...

[LoyceV]

so do i understand correctly that these high fees are only charged for the first transaction that my Phoenix wallet receives and from the second transaction onwards everything is in cents (if my wallet is filled with satoshis)?

As far as I know: yes. See the fees page.
But, if you don't have enough receiving liquidity, Phoenix will have to open a new channel again.

Android on my old phone is too old to update Phoenix Wallet, and I don't want to install more wallets on my regular phone. That's why I disabled "Automatic on-the-fly channel creation to avoid high fees" (from Settings).

i tried the same thing with another wallet (wos) and it doesn't matter whether it's the first or fifth transaction - the fees were in the cent range...

Wallet of Satoshi is custodial, so it doesn't open (on-chain) channels for you. Phoenix Wallet is non-custodial after opening the channel. That's the difference.
In my experience, custodial LN wallets work easier. Just don't trust them with with large amounts.

[cygan]

✂
But, if you don't have enough receiving liquidity, Phoenix will have to open a new channel again.
✂

how do you know or where can i see if a channel is opened/closed?

✂
Android on my old phone is too old to update Phoenix Wallet, and I don't want to install more wallets on my regular phone. Just in case, I disabled "Automatic on-the-fly channel creation to avoid high fees if I ever receive a payment. That's why I disabled "Automatic on-the-fly channel creation to avoid high fees" (from Settings).
✂

when i turn this option off, i get a message telling me that the next transaction will fail in any case

[LoyceV]

how do you know or where can i see if a channel is opened/closed?

Settings > Channel list.

when i turn this option off, i get a message telling me that the next transaction will fail in any case

If you don't have a channel yet, you'll need to open at least one.