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I wish someone had warned me about using self-custodial lightning wallet
6031 sats \ 25 comments \ @p2ptrade 9 Jun 2023 bitcoin
Using a self-custodial lightning wallet for the first time can be tricky. I learned some things the hard way and I want to share them with you. Here are some things you should know before you use a self-custodial lightning wallet :
  1. Don’t deposit your sats without checking the channel status of your wallet. If your wallet can automatically open channels, then you’re good to go.
  2. Watch out for the fees. Some wallets charge a high fee of a few thousand sats to open channels instantly. If you choose to open channels manually, some channels require a minimum amount of sats to lock (you can’t use them unless you close the channel), usually between 5k-10k sats.
  3. When you manually open a channel to a public lightning node, you need to fund the channel with your btc and pay for the on-chain fee. Choose the node you connect to carefully. Some nodes don’t give their inbound liquidity for free. Sometimes they can close or force close the channel and make you lose some sats for the on-chain fee.
  4. The capacity of a lightning channel is not unlimited. It is limited by the sats you use to fund it. So you can’t receive more sats than the amount you used to fund it, unless you buy channel liquidity from a node that provides it.
  5. It’s better to avoid using force close on your open channels. Try to use regular close and wait for the cooperative closing. Only use force close if you really have to, for example, if the node is inactive, unmanaged, or too expensive. And while you’re waiting for the channel to close, don’t clear your wallet app data or uninstall it. The channel needs to refund your sats and it needs that data to sync your wallet balance on-chain.
I hope this helps, and feel free to post about any other things that I may have missed about self-custodial lightning wallets.⚡😊⚡
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321 sats \ 8 replies \ @jk_14 9 Jun 2023
Recommended path in case of Phoenix wallet:
  1. send at least 300k sat to the freshly created wallet (just to pay for on-the-fly channel creation not more than 1% fee effectively)
  2. if you have Android smartphone - switch off automatic on-the-fly channel creation option to have full control over it
  3. patiently wait untill your channel capacity will reach $500 after next halving ;)
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121 sats \ 2 replies \ @Ludonavegante 9 Jun 2023
Regarding 2 I recently contacted the support team. They are working on having the option to switch off automatic on the fly channel creation on iOS
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0 sats \ 1 reply \ @BitcoinFoqus 10 Jun 2023
Why don’t people like on the fly channel creation? Using iOS
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32 sats \ 0 replies \ @jk_14 10 Jun 2023
every on-the-fly channel creation cost you 3ksat that's why a bigger channel like 300k sat at the beginning is reasonable scenario
with Phoenix I usually do "orange pill" with 150ksat:
  1. I send 300k sat to some newbie
  2. then he/she send me back 150k sat
This way they get slightly above 300k capacity channel with 150k sats in it
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21 sats \ 0 replies \ @ek 9 Jun 2023
shame on me, I just used 200k to open a channel a few hours ago:#190509
But yeah, 300k sats makes sense because of max(1%, 3k) for the channel open on Phoenix
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0 sats \ 3 replies \ @BitcoinFoqus 10 Jun 2023
I’m using Phoenix. Should every deposit be over 300k sats, or do smaller deposit amount get combined with an existing channel?
Or does every deposit create its own channel?
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0 sats \ 2 replies \ @jk_14 10 Jun 2023
if incoming payment overflow the free space that you currently have in your LN channel - it will create a new channel and that's why it will cost you at least 3k sat fee, unless you have switched off automatic on-the fly channel creation
For example I have 800ksat channel, filled in 50% - so I'm ready to send or receive up to 400ksat (without additional 3ksat fee), and it was sufficient for me so far...
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0 sats \ 1 reply \ @piotr 10 Jun 2023
And what if I don't have enough inbound liquidity and I disabled on-the-fly channel creation? Would I be unable to receive payments?
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0 sats \ 0 replies \ @jk_14 10 Jun 2023
of course you can activate on-the-fly channel creation, in such case my suggestion is to activate it rather "on-demand" but if you don't care about sudden 3k sat fee - keep it activated
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100 sats \ 3 replies \ @benthecarman 9 Jun 2023
These are all good points. We're trying to make these all explicit in mutiny so it's apparent to the user and they can make informed decisions
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158 sats \ 2 replies \ @FrickFrickFrick 9 Jun 2023
That will take away a lot of anxiety when it comes to these types of wallets. I don't really keep any funds in a lightning wallet unless I really need to because I have no idea how to self manage lightning in a way where I don't lose all my funds.
Lightning really seems to be focused around the idea that if you run a node you'll be trying to keep that node online as much as possible. This leads to a lot of bad UX.
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53 sats \ 1 reply \ @benthecarman 9 Jun 2023
you only need a always online node if you're running a routing node, otherwise it just needs to be online when you use it
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158 sats \ 0 replies \ @FrickFrickFrick 9 Jun 2023
That is good to know! Most guides for setting up lighting is under the assumption you are doing it to route. I love that Mutiny is thinking about all this from the actual end users perspective. I want explore lightning but have no interest in routing myself at least not at first. I have used it for payments here and there.
I wonder what are some other advantages of running a LN node if you're not routing? I think you can also do lnurl auth from a node which does not even require having sats. I am sure people will continue to discover all kinds of fun ways to use Lightning.
Exciting times ahead!
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135 sats \ 3 replies \ @cryptoquick 9 Jun 2023
Really good advice! I hear Breez and Blixt are good, but they're more limited because they put the whole node on the device. Phoenix is very clever, and can use trampoline routing to open a channel for you to receive a payment even if the wallet isn't open, but as a result of developing that proprietary technology, they essentially have a monopoly on which node you open channels to. Muun is good if you want compatibility with Lightning and the simplicity of on-chain self-custody, and are also willing to pay the "TL;DR tax".
What I'm most looking forward to are the next generation LDK wallets using Taproot channels and PTLCs that support async payments. These will work well in browsers, mobile, and even desktop apps. I think Mutiny is working on this, and it's also something we're keeping an eye on for BitMask.
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53 sats \ 2 replies \ @ek 9 Jun 2023
proprietary technology
?
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0 sats \ 1 reply \ @cryptoquick 10 Jun 2023
I just kind of assumed, do you know how I can run my own trampoline routing server? And where I can change that in the mobile app build? Was looking through here, but nothing obvious jumped out at me: https://github.com/ACINQ
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21 sats \ 0 replies \ @shibe 11 Jun 2023
I believe trampoline payments are open source, but I'm not sure how you would go about running your own. Electrum for example only seems to connect to trampoline servers, and there were a few options there besides ACINQ's node.
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21 sats \ 0 replies \ @Truus 9 Jun 2023
When you're choosing a (custodial) lightning wallet, make sure there is a way to get a backup, or something to get your funds back, if, for example, your phone is stolen/lost. The wallet may provide a backup key (some words for example), file (stored via cloud service), or support desk. Also, test this before loading it with your funds. If it doesn't, don't use it unless you're accepting this risk.
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0 sats \ 0 replies \ @bitcoinstox 7 Jun
Not only for the first time... It is always tricky, unfortunately! You must become a tech expert in order to use it properly. Otherwise, a disaster... 🙈
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0 sats \ 0 replies \ @gbks 11 Jun 2023
Which wallet did you use? There’s a big difference in how well different wallets explain these things.
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0 sats \ 0 replies \ @nymkappa_ 11 Jun 2023
The capacity of a lightning channel is not unlimited. It is limited by the sats you use to fund it. So you can’t receive more sats than the amount you used to fund it, unless you buy channel liquidity from a node that provides it.
I'd like to clarify this a bit for new users. If you open a channel of say 300,000 sats, you will NOT be be able to receive anything through this channel yet. This is because all the liquidity (your 300,000 sats) are on your side of the channel. In order to be able to receive funds on that channel, you need to spend first. So for example if you wanted to receive 150,000 sats using this channel, you first need to send 150,000 sats to someone else through that channel.
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0 sats \ 0 replies \ @iguano 10 Jun 2023
I always try to get new people into using self custodian wallets right away. There are many benefits for them and for the community as a whole to do that.
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0 sats \ 0 replies \ @IgnaciobTato 9 Jun 2023
Ok, but 300k to just open a channel would be too much, but if you think it as an investment, then it is better to do it when you own your own Node. At least you can get some sats from routing your channel.
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0 sats \ 0 replies \ @JesseJames 9 Jun 2023
Another words RTFM :-)
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0 sats \ 0 replies \ @chungkingexpress 10 Jun 2023
deleted by author
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