Set up a Watchtower and a Client on the Lightning Network

A watchtower monitors the bitcoin blockchain for any transaction attempting to steal from it`s client by closing a channel with a previous, invalid state. If a breach is found the watchtower immediately broadcasts a punisher transaction moving all funds in the channel to the on-chain wallet of it`s client.
If there are two nodes in your control from lnd v0.7.0 you can set them up to look out for each other. Best to be done with nodes in two separate physical location so any unexpected loss of contact can be covered for.
Update lnd
Check https://github.com/lightningnetwork/lnd/releases/ for the latest version and release notes. Update manually or use an automated helper script to update lnd on a RaspiBlitz or a compatible system.
Set up the Watchtower
Run the commands in the node`s terminal
# stands for $ sudo
Change the lnd.conf:  
# nano /mnt/hdd/lnd/lnd.conf
insert the lines on the end of the file:
[Watchtower]
watchtower.active=1
the watchtower listens on the port 9911 by default, but can be set to any other unused port with: watchtower.listen=0.0.0.0:PORT in the config file.
The IP address 0.0.0.0 is used to accept connections from everywhere (default setting)
allow the port through the firewall:
# ufw allow 9911 comment "watchtower"
# ufw enable
restart lnd
# systemctl restart lnd
forward the port 9911 on the router
Check in the log if the service is working:
# tail -n 10000 /mnt/hdd/lnd/logs/bitcoin/mainnet/lnd.log
Sample log output:
  2019-06-21 09:08:58.544 [INF] WTWR: Starting watchtower
  2019-06-21 09:08:58.544 [INF] WTWR: Starting lookout
  2019-06-21 09:08:58.544 [INF] WTWR: Starting lookout from chain tip
  2019-06-21 09:08:58.544 [INF] WTWR: Lookout started successfully
  2019-06-21 09:08:58.545 [INF] WTWR: Starting watchtower server
  2019-06-21 09:08:58.544 [INF] DISC: Attempting to bootstrap with: Authenticated Channel Graph
  2019-06-21 09:08:58.545 [INF] CMGR: Server listening on 127.0.0.1:9911
  2019-06-21 09:08:58.545 [INF] NTFN: New block epoch subscription
  2019-06-21 09:08:58.545 [INF] WTWR: Watchtower server started successfully
  2019-06-21 09:08:58.546 [INF] WTWR: Watchtower started successfully
  2019-06-21 09:08:58.547 [INF] CHBU: Swapping old multi backup file from /home/bitcoin/.lnd/data/chain/bitcoin/mainnet/temp-dont-use.backup to /home/bitcoin/.lnd/data/chain/bitcoin/mainnet/channel.backup
  2019-06-21 09:08:58.575 [INF] DISC: Obtained 3 addrs to bootstrap network
  2019-06-21 13:10:27.014 [INF] WTWR: Watchtower started successfully
  2019-06-21 13:14:50.743 [INF] WTWR: Accepted incoming peer 02b[email protected]171.25.193.25:34413
  2019-06-21 13:14:51.074 [INF] WTWR: Accepted session for 02b5792e533ad17fc77db13093ad84ea304c5069018f97083e3a8c6a2eac95a63f
  2019-06-21 13:14:51.074 [INF] WTWR: Releasing incoming peer 02b[email protected]171.25.193.25:34413
Filter the relevant messages continuously with (press CTRL+C to exit):
# tail -f -n 10000 /mnt/hdd/lnd/logs/bitcoin/mainnet/lnd.log | grep WTWR
Take note of the pubkey from:
$ lncli tower info
The watchtower`s pubkey is distinct from the pubkey of the lnd node.
Set up the node to be monitored (the watchtower client)
[LND v0.8.0+] Register one or more watchtower(s):
Change the lnd.conf:  
# nano /mnt/hdd/lnd/lnd.conf
insert the lines on the end of the file:
[Wtclient]
wtclient.active=1
Add a watchtower from the command line (can add multiple one-by-one):
$ lncli wtclient add <watchtower-pubkey>@<host>:9911
Use the watchtower-pubkey noted previously from $ lncli tower info.
For a clearnet client the host needs to be the clearnet IP (or dynamicDNS) of the watchtower even if the watchtower is running behind Tor. 
Restart lnd
# systemctl restart lnd
Check in the log if the service is working:
# tail -n 100 /mnt/hdd/lnd/logs/bitcoin/mainnet/lnd.log
Sample log output:
  2019-06-21 14:14:50.785 [DBG] WTCL: Sending Init to 02a[email protected]<host>:9911
  2019-06-21 14:14:51.098 [DBG] WTCL: Received Init from 02a[email protected]<host>:9911
  2019-06-21 14:14:51.105 [DBG] WTCL: Sending MsgCreateSession(blob_type=[FlagCommitOutputs|No-FlagReward], max_updates=1024 reward_base=0 reward_rate=0 sweep_fee_rate=12000) to 02a[email protected]<host>:9911
  2019-06-21 14:14:51.299 [DBG] WTCL: Received MsgCreateSessionReply(code=0) from 02a[email protected]<host>:9911
  2019-06-21 14:14:51.315 [DBG] WTCL: New session negotiated with 02a[email protected]<host>:9911, policy: (blob-type=10 max-updates=1024 reward-rate=0 sweep-fee-rate=12000)
  2019-06-21 14:14:51.320 [INF] WTCL: Acquired new session with id=02b5792e533ad17fc77db13093ad84ea304c5069018f97083e3a8c6a2eac95a63f
  2019-06-21 14:14:51.322 [DBG] WTCL: Loaded next candidate session queue id=02b5792e533ad17fc77db13093ad84ea304c5069018f97083e3a8c6a2eac95a63f
  2019-06-21 14:15:16.588 [INF] WTCL: Client stats: tasks(received=0 accepted=0 ineligible=0) sessions(acquired=1 exhausted=0)
Filter the relevant messages continuously with (press CTRL+C to exit):
# tail -f -n 10000 /mnt/hdd/lnd/logs/bitcoin/mainnet/lnd.log | grep WTCL
To have more information in the log add the line to the lnd.conf file:
  debuglevel=WTWR=debug,WTCL=debug
or run the command on the go:
lncli debuglevel --level=WTWR=debug,WTCL=debug
Sample result in the log:
  2019-07-29 15:26:51.386 [DBG] WTWR: Fetching block for (height=587633, hash=0000000000000000000b047fbe6d93c2af193249bdb864a99186914fc4b0b2c6)
  2019-07-29 15:26:52.192 [DBG] WTWR: Scanning 3007 transaction in block (height=587633, hash=0000000000000000000b047fbe6d93c2af193249bdb864a99186914fc4b0b2c6) for breaches
  2019-07-29 15:26:52.301 [DBG] WTWR: No breaches found in (height=587633, hash=0000000000000000000b047fbe6d93c2af193249bdb864a99186914fc4b0b2c6)
  2019-07-29 15:34:17.877 [DBG] WTWR: Fetching block for (height=587634, hash=00000000000000000010615b2c0b3c32cb4ebcb7eb0bd452812f5c48d0edad0c)
  2019-07-29 15:34:18.463 [DBG] WTWR: Scanning 2691 transaction in block (height=587634, hash=00000000000000000010615b2c0b3c32cb4ebcb7eb0bd452812f5c48d0edad0c) for breaches
  2019-07-29 15:34:18.619 [DBG] WTWR: No breaches found in (height=587634, hash=00000000000000000010615b2c0b3c32cb4ebcb7eb0bd452812f5c48d0edad0c)
Sit back and enjoy that now there is no way to cheat your node even when it is offline!
Setup for nodes behind Tor
Both nodes (the watchtower and the client) must be behind Tor to be able to communicate.
Tor Watchtower setup
Change the lnd.conf:  
# nano /mnt/hdd/lnd/lnd.conf
insert the lines on the end of the file: 
  [Watchtower]
  watchtower.active=1
Edit the Tor config file of the watchtower:
# nano /etc/tor/torrc
add the lines:
  # Hidden Service for incoming LND WatchTower connections
  HiddenServiceDir /mnt/hdd/tor/lndWT9911
  HiddenServicePort 9911 127.0.0.1:9911
restart Tor and lnd with systemctl:
# systemctl restart tor
# systemctl restart lnd
Take note of the watchtower's onion address by running:
# cat /mnt/hdd/tor/lndWT9911/hostname
Take note of the watchtower-pubkey by running
$ lncli tower info
Filter the log continuously with (CTRL+C to exit):
# tail -f -n 10000 /mnt/hdd/lnd/logs/bitcoin/mainnet/lnd.log | grep WTWR
Example output on the watchtower side:
  2019-08-20 11:26:30.555 [INF] WTWR: Accepted incoming peer [email protected]:57264
  2019-08-20 11:26:30.558 [DBG] WTWR: Received Init from [email protected]:57264
  2019-08-20 11:26:30.565 [DBG] WTWR: Sending Init to [email protected]:57264
  2019-08-20 11:26:30.931 [DBG] WTWR: Received MsgCreateSession(blob_type=[FlagCommitOutputs|No-FlagReward], max_updates=1024 reward_base=0 reward_rate=0 sweep_fee_rate=2500) from [email protected]:57264
  2019-08-20 11:26:30.968 [INF] WTWR: Accepted session for WTCLIENT_PUBKEY
  2019-08-20 11:26:30.968 [DBG] WTWR: Sending MsgCreateSessionReply(code=0) to [email protected]:57264
  2019-08-20 11:26:30.981 [INF] WTWR: Releasing incoming peer [email protected]:57264
  2019-08-20 11:27:27.260 [DBG] WTWR: Fetching block for (height=590941, hash=000000000000000000069b8d2739cb8736cc6a14927d760a7b7dfa47e1e5059e)
  2019-08-20 11:27:28.464 [DBG] WTWR: Scanning 3621 transaction in block (height=590941, hash=000000000000000000069b8d2739cb8736cc6a14927d760a7b7dfa47e1e5059e) for breaches
  2019-08-20 11:27:28.729 [DBG] WTWR: No breaches found in (height=590941, hash=000000000000000000069b8d2739cb8736cc6a14927d760a7b7dfa47e1e5059e)
Tor Watchtower Client setup
[LND v0.8.0+] Register one or more watchtower(s):
Change the lnd.conf:  
# nano /mnt/hdd/lnd/lnd.conf
insert the lines on the end of the file:
[Wtclient]
wtclient.active=1
Add a watchtower from the command line (can add multiple one-by-one):
$ lncli wtclient add 02b[email protected]xjyldrwmtxtutdqqhgvxvnykk4ophz6ygr3ci4gxnnt5wibl7k4g2vad.onion:9911
The details of a test node are prefilled. Connections are welcome, but there is no guarantee for this service to stay online.
Use the watchtower-pubkey noted previously from $ lncli tower info.
The host is watchtower's .onion address noted previously from: # cat /mnt/hdd/tor/lndWT9911/hostname
restart lnd with systemctl:
# systemctl restart lnd
Check which watchtowers are listening:
$ lncli wtclient towers
Example output:
  {
          "towers": [
                  {
                          "pubkey": "02b745aa2c27881f2494978fe76494137f86fef6754e5fd19313670a5bc639ea82",
                          "addresses": [
                                  "xjyldrwmtxtutdqqhgvxvnykk4ophz6ygr3ci4gxnnt5wibl7k4g2vad.onion:9911"
                          ],
                         "active_session_candidate": true,
                          "num_sessions": 0,
                          "sessions": []
                 }
          ]
  }
Filter the log continuously with (CTRL+C to exit):
# tail -f -n 10000 /mnt/hdd/lnd/logs/bitcoin/mainnet/lnd.log | grep WTCL
Example output on the client side:
  2019-07-26 10:30:08.041 [INF] WTCL: Client stats: tasks(received=8 accepted=8 ineligible=0) sessions(acquired=0 exhausted=0)
  2019-07-26 10:30:34.105 [DBG] WTCL: Processing backup(8fd5d5dc97fc6e52da36bd527357a9c87f2a2529379f9f50241e35ab0c95c404, 6315)
  2019-07-26 10:30:34.106 [DBG] WTCL: SessionQueue(026d7b4f4fd7dcdb5a2acce00a8d1cca5bbaeb7e9d89a30ded7d4b62b7b50b3399) deciding to accept backup(8fd5d5dc97fc6e52da36bd527357a9c87f2a2529379f9f50241e35ab0c95c404, 6315) seqnum=0 pending=8 max-updates=1024
  2019-07-26 10:30:34.108 [INF] WTCL: Queued backup(8fd5d5dc97fc6e52da36bd527357a9c87f2a2529379f9f50241e35ab0c95c404, 6315) successfully for session 026d7b4f4fd7dcdb5a2acce00a8d1cca5bbaeb7e9d89a30ded7d4b62b7b50b3399
  2019-07-26 10:31:08.041 [INF] WTCL: Client stats: tasks(received=9 accepted=9 ineligible=0) sessions(acquired=0 exhausted=0)
More info:
​https://github.com/lightningnetwork/lnd/blob/master/docs/watchtower.md​
Latest lnd release notes: https://github.com/lightningnetwork/lnd/releases​
​https://thebitcoinnews.com/watchtowers-are-coming-to-lightning/​
​https://bitcoinops.org/en/newsletters/2019/06/19/​
Will O`Beirne shows in this article (and GitHub repo) how to demonstrate a breach and the actions of a watchtower on a simulated network: https://medium.com/@wbobeirne/testing-out-watchtowers-with-a-simulated-breach-f1ad22c01112​
SLP83 Conner Fromknecht – Bitcoin Lightning Watchtowers in depth
podcast: https://stephanlivera.com/episode/83
transcript: http://diyhpl.us/wiki/transcripts/stephan-livera-podcast/2019-06-24-conner-fromknecht-stephan-livera/​
Check for some altruistic watchtowers and share your own: https://github.com/openoms/lightning-node-management/issues/4​
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