Reading Assignment: Lightning Basics

[Alko89]

@javier_ortiz_mir

but what cannot happen is that the amount that a user has decreases to zero, because in that case, the channel would be broken (channel exhaustion)

If a channel is exhausted on one site it only means you will only be able to send the funds from the side that has all the funds, it doesn’t really brake the channel.

@javier_ortiz_mir

I also dont know if a user can load a bigger amount than the channel capacity, or in that case an additional channel would be automatically opened, or maybe the network will feedback an error or something like that.

The channel capacity is the amount the channel if funded with and can be as large as you want.

@javier_ortiz_mir

If and when the “Buffer capital” is exhausted, the channel would be broken, so that the node should be down in terms of the network, and could only be reestablished after providing enough capital for the node to work.

Same as in the first, the channel can be rebalanced, there are a few methods to do it. Either fund the empty side in the channel, send funds back to the other side or use another open channel that is funded to send the funds to the same node on the empty channel (basically circling the funds back to yourself through the network).

[javier_ortiz_mir]

wow! you are a BTC sama really! Thanks for the accurate answers. But Im still wondering, if Bob funds a channel with Alice using 1 BTC, Bob or alice can later fund it with 10 BTC? and send 5 BTC? wouldnt that exceed the channel capacity?

[Alko89]

Thanks!

If Alice has a channel funded with 1 BTC and Bob with 10 BTC and Bob sends 5 BTC to Alice then he wouldn’t exceed his capacity, the end result would be: Alice would have 6 BTC and Bob would have 5 BTC.

[javier_ortiz_mir]

So the “capacity” of the channel is not actual capacity in terms of … for exampe, if I have a truck that has a capacity of 2 TONs, you cannot send more than 2TONS at a time with the same truck. If you would need to send 6 TONS of cargo, you would need 3 trucks (or 3 channels)… but in the lightning network terms, I think that the name of “channel capacity” is kind of miss alocated… because no matter what is the channel capacity between A and B, you can still send whatever funds from A to B

[Alko89]

The channel has inbound and outbound capacity. The outpound capacity is the funds you provided in the channel and the inbound capacity is the capacity that was provided by the other party you opened the channel with.
The outbound capacity are the funds you are able to send through the open channel and the inbound capacity are the funds you are able to receive.
So in terms of trucks if you buy a truck that can carry to a third party 2 tons you will be able to send 2 tons of cargo and the third party has a truck with 3 tons can send you cargo weighing 3 tons.
Also if you send the 2 ton truck to the other party, then he will be able to send you your and his truck back with total capacity of 5 tons using the same route (channel).
If you want to transfer more you must either upgrade your existing truck to be able to carry more capacity or buy a new truck (open a new channel).

[George]

1. How many times can you refill your LN channel?
   Unlimited times
2. What’s the difference between Advertised and non-advertised channels?
   Payment channels that are only intermittently available(phones) should not be used for routing and generally won’t be advertised to the broader network.
   Advertised channels have a high availability and connectivity.
3. How does Buffer capital work?
   When funds will happen to be moving in the same direction (e.g. more spending than receiving). A routing node must maintain enough “buffer capital” to be able to wait until the flow of funds reverses and channels return to a more balanced state.
   Routing nodes that don’t contribute enough capital to handle periods of imbalance will experience channel exhaustion (when a node has no funds remaining in a channel) and routing failures.
4. What is onion routing?
   Intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route.

[camarosan]

• How many times can you refill your LN channel?
  All the necessary is unlimited.

• What’s the difference between Advertised and non-advertised channels?
  on the network we have non advertised channels bellowing to end users channels (pcs, laptos, phones, etc), these channels will be discovery by other methods different than advertising for example routing hints.

• How does Buffer capital work?
  on the network we could have on routing nodes more spending than receiving in any time these nodes will agregate buffer capital to avoid not to have funds in a given time.

• What is onion routing?
  Your nodes only know the identity from the precede node and the successor node from a payment perspective.

[Patrick_Damery]

1. How many times can you refill your LN channel?
   LN channels can be refilled as many times as you want as long as you have the balance to do so.

2. What’s the difference between Advertised and non-advertised channels?
   Most nodes in LN (smartphones, laptops, etc.) won’t advertise channels by default, instead they’ll rely on routing hints embedded in each payment request will provide information about the recipients channels and therefore allow the building of a payment route to it.

Advertising or routing nodes will on the other hand broadcast it’s channels, have greater balance and be available on a more permanent basis.

3. How does Buffer capital work?
   Routing nodes will aggregate multiple users inflows and outflows, and there could be times where there are more outflows from their users than inflows. In this case having buffer capital allows the node to continue operating longer until eventually the user’s inflows rebalance this. If a routing node fails to provide enough buffer capital then channels can be exhausted and have routing failures.

If this happens often enough then other nodes may disconnect from the routing node.

4. What is onion routing?
   Because routes are built by the sender, the sender can specify the nodes that will be used to handle the transaction ahead of time, without having the nodes along the way deciding what path to take. This allows for Onion routing, which is a feature in LN that allows for multi-hop payments where each node only know the information of the previous node. This enhances privacy of both the source and recipient of payments while also providing censorship resistance.

LN also supports Tor and will be used by default further enhancing the privacy and censorship resistance of the network.

[madingo]

Lightning Basics - Reading.

1. You can refill your LN Channel as many times as you like - refill over and over again.

2. the difference between an 'advertised’ and ‘non advertised’ Channels is that non advertised will not be available for routing and will not be visible in a network graph whiles the advertised is the opposite.

3. Buffer Capital is when a routing node have enough funds (Buffer Capital) to be able to wait until the inflows or outflows of funds reverses and channels return to a more balance state.

4. Onion routing (use in multi - hop) is when intermediate nodes in the payment path only know the identity of their immediate predecessor and successor in the route. It encryption obscure the sender and receiver information from bridge nodes, making it more difficult to attempt censorship.

[muradawad]

@Mislav_Bajan

Onion routing

1. As many times as you wish!

2. Advertised channels are visible at the network.

3. The node got to have enough capital to balance the payment cycle.

4. Onion routing is a technique for anonymous communication over a computer network. In an onion network, messages are encapsulated in layers of encryption, analogous to layers of an onion. The encrypted data is transmitted through a series of network nodes called onion routers, each of which “peels” away a single layer, uncovering the data’s next destination. When the final layer is decrypted, the message arrives at its destination. The sender remains anonymous because each intermediary knows only the location of the immediately preceding and following nodes. While onion routing provides a high level of security and anonymity, there are methods to break the anonymity of this technique, such as timing analysis.

[mervxxgotti]

1. How many times can you refill your LN channel? — unlimited
2. What’s the difference between Advertised and non-advertised channels? — advertised channels are between gateway routing nodes while non-advertised are end points for users such as mobile and private devices
3. How does Buffer capital work? — a routing note should maintain enough buffer capital so when too many funds move in the same direction, the routing node doesn’t experience channel exhaustion during these periods of imbalance where the node may be drained of funds and result in routing failure
4. What is onion routing? — where intermediate nodes on the path only know the identity of the immediate predecessor and successor in the route, much like when using Tor, in order to enhance user privacy and censorship resistance by protecting the identity of the original sender and end receiver

[JRSmith88]

1. as many times as needed

2. end user nodes will not “advertise” channels by default and may require routing hints for their path. advertised channels are visible on the network.

3. In addition to providing continuous access to the network, routing nodes will aggregate inflows and outflows across many users so that overall flows to and from a routing node will be somewhat balanced.

4. onion routing protects the identities of payment senders and receivers so as to enhance user privacy and censorship-resistance.

[Chawan]

1. How many times can you refill your LN channel?
   Unlimited times. Accounts can be emptied and refilled as long as the payment channel remains open.
2. What’s the difference between Advertised and non-advertised channels?
   Non-advertised channels usually are end users node like smartphone, laptop. These channels will not be available and only accessible through “routing hints” On the other hand, this allows the network to be more efficient and only display advertised channels which will be consistently available.
3. How does Buffer capital work?
   Buffer capital allows node to stay active when funds move in the same direction. This capital will be used to wait out for the inflows and outflows to be balanced again. Nodes without enough capital will eventually be disconnected or routed around by other nodes.
4. What is onion routing?
   A privacy protection system where nodes are only known in layer, only immediate successor and predecessor’s identity are shared.

[IntrepidShape]

1. How many times can you refill your LN channel?
   Infinitely

2. What’s the difference between Advertised and non-advertised channels?
   Non-advertised channels such as smartphones do not publicly broadcast, where as advertised are.

3. How does Buffer capital work?
   Adds buffer to enable everyone to transact and so one payment channel doesn’t shut down suddenly.

4. What is onion routing?
   The routing protocol implemented in the tor browser. Allowing more anonymity online.

[Alex_Carr]

1. How many times can you refill your LN channel?

You may refill your LN channel as many times as you want. Be aware that each time you refill you will be charged an onchain transaction fee.

2. What’s the difference between Advertised and non-advertised channels?

Advertised channels are routing channels which are visible in the network.Advertised channels are used for routing of non advertised channels. Non-advertised channels are typically end users (ex mobile devices).

3. How does Buffer capital work?

Buffer capital are the funds used for routing payments and must be large enough for payments to be able to get through. Maintaining a large enough balance is important especially when a node’s channel is moving all to the same direction.

4. What is onion routing?

Onion routing is a private routing mechanism that transmits packages through many routing nodes. The nodes only knows the immediate node where that package came from and going to, but not the previous or after nodes. This makes it extremely difficult to trace where a payment originated from.

[ryan9632]

1. How many times can you refill your LN channel?
   As many times as you want, but you have to pay an on-chain transaction fee each time.
2. What’s the difference between Advertised and non-advertised channels?
   Most channels are non-advertised, such as end user channels. Advertised channels are used for things like routing payments, and have certain expectations, such as having buffer capital and being online all the time.
3. How does buffer capital work?
   Buffer capital is extra capital held by routing nodes to prevent “channel exhaustion”, in which nodes can suffer “routing failures” due to lack of funds. Routing nodes should maintain sufficient buffer capital or else other nodes will stop communicating with them.
4. What is onion routing?
   Onion routing means that routing nodes only know the identity of the nearest sender and receiver. They don’t know the source of the transaction or the final destination. This is possible because the lightning network uses “source routing”, in which the sender decides the full path of the transaction, rather than the routing nodes themselves.

[adolfogonzalezt]

1- unlimited.
2-Non advertisesd channels will be accessible through the use of extra routing information or rounting hints.
3- A routing node must maintain enough buffer capital to be able to wait until the flows of funds reverses and channels return to a more balanced state. Buffer capital is needed ho handle imbalance states were outflows are bigger than inflows, also to avoid channel exhaustion.
4- Onion routing means that only the immediate predecessor and successor in the route are known for the intermediate node. This protects the identities of payment senders and receivers to enhance user privacy and censorship resistance.

[Emmett]

1. as many as you want
2. Advertised channels are always connected to the network, unadvertised channels are not
3. Buffer capital keeps the channel liquid in case of imbalances in money direction
4. it means that any node only knows its immediate preceding and succeeding node as money passes through the network

[yeoyo]

1. How many times can you refill your LN channel?
No limit

2. What’s the difference between Advertised and non-advertised channels?
Most end user nodes are usually non-advertised channels by default and are only made available via routing hints embedded in Lightning payment requests. Advertised channels are assumed to have a higher availability.

3. How does Buffer capital work?
Buffer capital is a mechanism which is in place to ensure a node do not run out of funds due to an imbalance of transactions within a given period of time, which will thus cause routing failures. Once a threshold is reached, the node will need to wait until it has met the buffer capital requirements, a more balanced state before it can re-participate in the network.

4. What is onion routing?
Onion routing suggests that intermediate nodes used for routing a transaction from a source to destination will only have information of immediate predecessor and successor nodes, hence protecting the identity of the sender and receiver.

[ImagineCrypto]

o	How many times can you refill your LN channel?
	Unlimited as long as balance is present.
o	What’s the difference between Advertised and non-advertised channels?
	An advertised channel is typically a channel that is online all the time and therefor can be a permanent routing method for payment network transactions. The non-advertised typically and end user would be an Iphone or laptop which is not always available in the network as it may not be in use at all times. It cannot be seen in the main routing network and can only be accessed through “hints” about its routing path
o	How does Buffer capital work?
	Routing nodes that run continuously in network will keep sufficient btc buffer to accommodate for inbalances in the network. For instance a lot of spending is happening exhausting some channels. BTC Buffer is needed in times of over spending and over receiving. If the buffer isn’t there the transaction will be cancelled funds are stuck in incomplete transactions.
o	What is onion routing?
	It is used for multi-hop payments. Intermediate nodes in payment path know only the identity of their immediate predecessor and successor in the route. This protects the identity of the senders and receivers to enhance user privacy and censorship resistance.