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Self Custody Lightning 2025 - Nick Slaney
219 sats \ 6 comments \ @OT 11h lightning
https://sats.build/self-custody-lightning-2025/
Interesting article about building out the ideal LN wallet. Using hosted wallets, splicing and SIP (Swap In Potentiam), all the abstractions are under the hood allowing the user to be self custodial from the start.
Here's an example of someone DCAing in small amounts:
The DCA’er This is the current lightning wallet torture case. This wallet holder buys $5 of Bitcoin daily and wants to keep custody of their funds. They occasionally buy something on the lightning store, but generally hodl.
$5 / day deposit $30 / month spend Hodl the rest The DCA’er starts with a wallet with a hosted channel. As they deposit, they quickly graduate to a self-custody channel. The LSP opens a 350k satoshi channel to their wallet at the LSP’s desired threshold.
The DCA’er continues depositing Bitcoin into their wallet. When they’ve deposited 330k satoshis, their wallet instantly swaps out 300k satoshis to an on-chain SIP address with a 1 month expiry. The user can continue receiving deposits over lightning that fill the channel until another swap.
When the DCA’er wants to spend, if they have enough balance in their lightning channel, the wallet can simply spend as normal. If they need to spend more than what they have in their channel, the wallet can call up Bitcoin from a previous SIP address to be swapped into the channel instantly. Alternatively, the SIP Bitcoin can create a new channel or even be spliced into the existing one to increase channel capacity.
SIP addresses eventually become on-chain UTXOs. 300k is chosen here as a relatively safe UTXO size to keep long term. The expiry path of the SIP address could be a multisig, allowing these on-chain UTXOs to become more “cold” over time.
The LSP can monitor SIP usage and splice in more capacity if the DCA’er becomes more of a spender over time.
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21 sats \ 5 replies \ @DarthCoin 11h
Hosted channels were first thought up by Andre Neves, Fiatjaf (before he made nostr) and the ZBD team
Not true. Hosted channels were created by Anton Kumaigorodski with SBW and later forked into NBD suite tools by Fitajaf with OBW, actually abandoned project.
There's anyways another fork of SBW, Valet (by StandardSats) that they want to bring back the hosted channels too.
Indeed, I like the hosted channels as a simple way to onboard total noobs (starting from zero sats). Is a very simple, very cheap solution that doesn't require to involve any other mumbo jumbo complex swaps and transition accounts.
From a hosted channel is possible also to move all funds directly into a new self-custody LN channel, on the same app.
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10 sats \ 4 replies \ @OT OP 10h
I used to use OBW which had hosted channels. Too bad it's been abandoned.
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66 sats \ 3 replies \ @Filiprogrammer 9h
Fun fact: You can actually setup a hosted channel between two LND nodes in a convoluted way:
  1. Create a zero-conf channel with --sat_per_vbyte 1, so it does not immediately confirm
  2. Replace the opening transaction
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0 sats \ 2 replies \ @OT OP 9h
What would happen if someone were using it for zapping on nostr like 21 sat TX back and forth? Wouldn't that build up a large onchain fee for when the opening TX finally confirms?
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42 sats \ 0 replies \ @Filiprogrammer 9h
No, zapping over the Lightning network does not create an onchain transaction. And also the channel opening transaction will never confirm if you replace it, as I mentioned in step 2.
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31 sats \ 0 replies \ @DarthCoin 9h
You can use endlessly those zero-conf channels, never closing them. https://docs.lightning.engineering/lightning-network-tools/pool/zero-confirmation-channels So you will never have an onchain "footprint".
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