This is very interesting: if you could operate your side of a lightning channel as a multisig, could you make it safer? I think a threshold of signers would all have to stay online, but compromising your node would now require compromising a threshold of signers.
thresholdizing a Lightning party requires nesting a threshold signature scheme inside of an established two-party MuSig2 protocol without altering its nonce exchange or message flow.
In this work, we resolve this limitation by formalizing nested threshold multi-signatures, a new cryptographic primitive for thresholdizing one participant inside a multi-signature protocol.
As an instance of this primitive, we present Iceberg, the first construction for nested threshold MuSig2 signatures.
Iceberg enables one side of a Lightning channel to operate as a -of- threshold group while appearing to the counterparty as a standard MuSig2 participant.
As a result, threshold custody can be deployed unilaterally on today's Lightning Network without requiring any modifications to Bitcoin, the Lightning protocol, or channel counterparties.
Our measurements show that thresholdizing a Lightning channel incurs only modest overhead, since a threshold group tolerating one corrupted member sustains over of the payment throughput of an unmodified endpoint.
It does seem like added complexity, though. And lightning already does have a bit of complexity.
The applications for this aren't obvious to me. I can imagine VLS-like multisig for lightning if someone is operating a large node, but given that a threshold of keys is hot anyway, it seems kind of incremental relative to VLS. I'm probably missing something but I couldn't find speculation about applications in the paper either.
I'm still learning how to run my own Lightning node, so the operational side of this caught my attention more than the cryptography itself.
Removing a single online signing key as the main point of failure sounds useful. What I'm most interested in is how that feels in day-to-day node operation: signer availability, coordination, and how much extra complexity the threshold setup adds in practice.
If that can stay manageable without noticeably getting in the way of normal Lightning operations, it seems like a very interesting direction.