Can lightning allow closed channels to dump to lightning instead of on-chain?
5 sats \ 4 comments \ @Coinosphere 15 Dec 2023 lightning
There appear to be 2 things stopping people from keeping their primary amount of sats in a lightning channel:
  1. There's more security on-chain with hardware wallets.
  2. The lack of price surety. Rebalancing costs extra in fees, and there's always a possibility of being forced to pay channel close fees.
I've imagined a way or two to put more security into the lightning wallet, but I think people still wouldn't move the bulk of their wealth to lightning unless they felt sure it wouldn't just be dumped back out onto the main chain when someone else closes the channel(s) it's in. Fees while channel balancing, automatically or not, also costs too much money for comfort. In order for the lightning network to take off those sats should come from & go to other lightning channels, not the fee-ridden blockchain.
So what exactly is stopping value inside a lightning channel from being sent to another lightning address instead of to the chain? (Or coming from it?) I know it sounds like a wallet code change but is this impossible at all?
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10 sats \ 1 reply \ @niftynei 16 Dec 2023
funds could move into another lightning channel but this would require a spec update, something @ddustin has been calling “splice to close”
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0 sats \ 0 replies \ @Coinosphere OP 17 Dec 2023
Oh nice... I wonder what the costs are to make that change.
If no one was afraid of forced channel closures anymore then it would certainly have an impact on adoption.
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10 sats \ 1 reply \ @tomlaies 15 Dec 2023
No this is not possible.
The balance in a lightning channel always stays the same if you add up what both parties have. This is because of how channels fundamentally work: Opening a channel is a transaction to an UTXO that is owned by both parties. Transactions in a channel are just unpublished transactions of this common UTXO. You can't close a channel and move all funds without touching the common UTXO.
(This explanations was very simplified. If you want to delve in deeper you can look up how hashes, hash preimages, HTLCs and digital signatures work - they are what ensures what I previously called "unpublished transactions")
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0 sats \ 0 replies \ @Coinosphere OP 15 Dec 2023
This is what I was afraid of. I kind of knew it conceptually but couldn't put it into words. Thanks for that.
So this begs the follow-up: Would you move the bulk of your wealth into lightning channels? I think most people would only do so if it's a custodial channel that they never have to think about balancing nor fearing closure. In fact, just the fees from those events being passed along by the custodian will get too high for them one day.
Hard to think of a way around this dead-end for lightning. :(
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