How viable is Zeus Wallet for self-custody swaps (embedded node)? \ stacker news ~lightning

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How viable is Zeus Wallet for self-custody swaps (embedded node)?

462 sats \ 13 comments \ @06bc1a977d 3h lightning

I’ve been researching Zeus by watching tutorials and reading comments but I can’t find a clear answer to my purpose in considering Zeus. I like the self-custody aspect of Zeus’ embedded Lightning node and the higher security it offers to send my BTC from an exchange via LN, then swap/splice it on-chain to my cold wallet. I don’t need a small purchase spend wallet currently, which is what most of the tutorials seem to focus on. But none of the tutorials showed a use of self custody plus obfuscation for moving larger amounts via LN to cold storage.

What I want:

To send the amount that I’m buying DCA on an exchange to Zeus. Not large increments, maybe in batches of 100,000 - 250,000 sats into Zeus Lightning.
Once I consolidate large enough UTXO’s in Zeus LN I will do an on-chain send to my own air-gapped cold wallet. Essentially emptying my Zeus wallet every month or so.

What I cannot verify yet:

Is it better to open a channel the first time by swapping from on-chain BTC to my new Zeus LN wallet, or by sending a Lightning transfer from the exchange directly? (I think opening a new channel by transfer will be about 10,000 sat fee)
When opening a channel I think it will need to be large enough to accommodate the maximum balance I plan to hold on Zeus LN wallet at any given time, not just the size of the periodic transfers from the exchange (= rather than a 250,000 sat size channel I should do 1,500,000 size?)
But once I transfer out my larger UTXO (maybe 1,250,000 sats) and my LN wallet is now only holding 250,000 sats, what happens in the coming weeks when I build up again to 1,500,000 via new LN transfer to Zeus? I read somewhere that it would not matter that I initially opened a large 1,500,000 channel, by sending on-chain I would have my channel reduced and basically have to open a new channel again every month or so to accommodate the new balances.

Am I mistaken about how LN channels get reduced? Is my scenario of swapping large amounts not an intended purpose of Zeus?

(I’ve basically been doing this exact process on Muun and it works fine, but it’s not full self-custody, not my own node, and LN swap fees are a bit high)

Thanks for any advice from current Zeus users!

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20 sats \ 0 replies \ @RadentorForNoxus 2h

Is it better to open a channel the first time by swapping from on-chain BTC to my new Zeus LN wallet

You can open your own channel (and emptying it to receive more in the future) or just order an Olympus channel from within the app beforehand.

by sending a Lightning transfer from the exchange directly?

Maybe it's just my preference but, one bigger channel is better than having multiple smaller channels.

When opening a channel I think it will need to be large enough to accommodate the maximum balance I plan to hold on Zeus LN wallet at any given time, not just the size of the periodic transfers from the exchange (= rather than a 250,000 sat size channel I should do 1,500,000 size?)

Yeah, when you already filled up your channel you can just do one swap out to onchain thus bigger payment size would be better

But once I transfer out my larger UTXO (maybe 1,250,000 sats) and my LN wallet is now only holding 250,000 sats, what happens in the coming weeks when I build up again to 1,500,000 via new LN transfer to Zeus?

You would have a lot more receiving capacity

I read somewhere that it would not matter that I initially opened a large 1,500,000 channel, by sending on-chain I would have my channel reduced and basically have to open a new channel again every month or so to accommodate the new balances.

Zeus (LND) didnt support splicing yet dont worry about it

121 sats \ 0 replies \ @DarthCoin 2h

If you deal with small amounts received from a source you could use also directly the cashu wallet, without any channel. But I would use that for small amounts, under 100k sats. From that cashu wallet you can do internal swaps anytime you want, into your Zeus onchain UTXO or any external UTXO if you like.
But if you want to consolidate multiple small amounts, let's say into a 1.5M sats will be better to use a LSP channel. You will have to consider also that sometimes swaps from LN to onchain of 1.5M sats could fail due to low liquidity. But in Zeus also you have the option to choose from multiple swap operators if one it fails.
Before you start receiving size correctly your channels. For example: you plan to receive 3 payments during a month of total of 1M sats. So open a 1.2M sats if you want to play around with a fix amount of 1M sats. Why? Because there are some reserves fees, commit fees and buffer reserve to take in consideration. So if you have a 1.2Msats channel filled up, send out only 1M sats. The remaining 200k you can send it later but also no max than 90% (because of the buffer reserve) and so on. You will never be able to send all at once.
No, once you send almost all your sats from that channel, IT WILL NOT REDUCE the size of the channel. The size of the channel always remain the same and YOU CAN REFILL IT AGAIN anytime you want. That's the whole idea of payment channels: spend and replace. Yes, could be a splicing option (not yet available for LND/Zeus) where you can resize the channel. But it doesn't make sense to have an automatic shrink of a channel once you send almost all sats from it. An expansion of a channel, yes, make more sense, but keep in mind that will have extra fees onchain, is practically like another channel opening.
You can have multiple channels, with same LSP or with different peers. When you send out, you can use MPP (multi-part payment) and could use multiple channels for a single payment.

I hope this explanation it clears your questions. If you have more questions, I am happy to respond.

0 sats \ 10 replies \ @justin_shocknet 1h

It'll be cheaper, only ~500 sats total*, to send coin on chain to Zeus and then use that on-chain coin to initiate your own channel.

By sending to Zeus via lightning from the exchange you are buying a channel they initiate from their LSP, which has lease costs factored in. Also those JIT channels from the LSP are also trusted at first and can be a little flakey... best to just open your own channel since you're working with chain-scale amounts.

So for your purposes, build up an on-chain balance in Zeus that's a little greater than the max you plan to withdraw every month.

*LND is what powers Zeus and that has a 20k sat reserve for emergency channel closures. With that reserve plus the routing reserve you'll probably tie up an extra 25k, that is not a cost, its just illiquid. Channel ops are only a few hundred sats each under current fee climate.

I don't believe Zeus splices the channels smaller, LND doesn't support that. They will however close inactive channels that are tying up their liquidity. I doubt that will be a problem for you since you'll be routing over it a few times per quarter and therefore generating routing fees to justify keeping it open, and much of that time the liquidity will be on your end anyway.

Since you would be initiating the channel, you also don't have to open it to the LSP which aggressively optimizes for revenue, but it may be best to do so in your case to reduce future routing fees assuming you use Zeus's swap service instance. If you were to use Boltz instead of Olympus for swaps for example, you'd want to open your channel to Boltz.

17 sats \ 9 replies \ @DarthCoin 1h

https://docs.zeusln.app/lsp/channel-differences

0 sats \ 8 replies \ @justin_shocknet 1h

Yea OP seems like an obvious candidate for option 1.

0 sats \ 7 replies \ @DarthCoin 1h

I would not do that. Better purchase in advance, especially if you already have a LN wallet with some sats in it.

Or you can even receive first, from the exchange, into Zeus cashu wallet (no channels needed) and then pay from there the lease for the LSP channel, with the size of the channel that fits your needs for multiple withdrawals.

JiT channels are not for this case. Channels in advance are the best option.

0 sats \ 6 replies \ @justin_shocknet 1h

That's just unnecessary extra steps, are you referring to the routing fee discount on the pre-paid channel? I think its only discounted from the up-front fee they charge for the lease.

17 sats \ 5 replies \ @DarthCoin 1h

That's just unnecessary extra steps,

Same as for sending from onchain. But if you already have another LN wallet, you pay from that one the lease of the channel.

Is better this option for OP, because he need that channel to stay open a determined period. And that is guaranteed only by the LSP channels in advance, not for channels initiated with users funds.

Routing fees are irrelevant in this case.

I think OP did the mistake to use JiT channels only, and that's why had the impression that is using splicing... when in fact it was opening multiple tiny channels with a huge cost and unnecessary friction.

JiT channels are NOT viable for this scenario.

0 sats \ 4 replies \ @justin_shocknet 1h

Sounds like he can already send from Lightning from the exchange so could buy the pre-paid channel with that. I don't think closure will be an issue since he's DCA re-filling the channel regularly.

Pre-paid could make sense given that if the routing discount offsets the lease costs, main thing is to avoid trashu or JIT channels.

0 sats \ 3 replies \ @DarthCoin 1h

I would avoid using the exchange withdrawal for any direct payment. If something goes wrong, you cannot manage it properly because you are not in control of any of the parts (sender and receiver) and even lose funds..

Better use a buffer zone. As I always said: use the 3 levels of stash - hold, cache, spending.

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