High onchain fee environment
Notes on using the Lightning Network when miner fees are high.
Recommendations to get ready for a high fee environment beforehand.
- Open channels during low fee times strategically (weekends)
- Close inactive and unreliable channels early during low fee times
- Minimise downtime and instability if running a routing node
- Funding from a single sig wallet is cheaper
- Prepare a selection of good size UTXOs for minimal cost channel opens
- consolidate (beware of privacy implications)
- a well funded and long running JoinMarket Maker wallet will have different sizes of coinjoined outputs available
- Activate Anchor Commitments
- affects only the new channels opened when both peers support anchors
- aimed to be active by default from LND v0.13
- will need one UTXO per channel in the onchain wallet of LND to pay the closing fee with CPFP - these are not reserved in the wallet yet
- All nodes:
- the channel balance will appear to be smaller as the commitment reserve will be higher
- offchain transaction fees will also increase (remains to be proportional to the payment amount)
- payment failures might appear more often as liquidity dries up
- Auto-rebalancing should be allowed to use higher fees
- Offchain traffic will increase
- During high fee periods less channels will be opened
- Less capital will be reallocated
- Submarine Swaps get more expensive (requires on-chain transactions)
- Overall channels will get out of balance quicker
- Include a change output to be able to use CPFP to bump the fee of the channel open transaction
- Batch opens
- the biggest saving is when using 1 input to open multiple channels
- aim for next block with the opening transaction fee to prevent the fees running away
- can use PSBT-s (even from ean external wallet) with the command line tools available:
bos openandbos fundlightningcli fundchannel_start id amount [feerate announce close_to push_msat]
- avoid opening public and private (unannounced) channels in the same batch - defeats the purpose of not announcing channels in the gossip
A pending channel will become "stale" after 2016 blocks - the peer will forget about the funding transaction, so the channel will never become online.
- the only option left to unlock the funds from the multisig will be an (expensive) force close.
- Use CPFP (never RBF)
- CPFP can be only used if there is a change output from the opening transaction: https://api.lightning.community/?shell#bumpfee):
lncli wallet bumpfee --sat_per_byte 110 TXID:INDEXLightningwiki.net article: https://lightningwiki.net/index.php/Bumping_fee_for_lightning_channel_open
- Aim for a cooperative close if must
- can use CPFP from the receiving wallet if a pending ccooperative close is stuck in the mempool with a low fee
- Run the channel close command again if the transaction has been removed from the mempool
lncli closechannel FUNDING_TXID INDEX - Force closes are ~5x more expensive than the next block fee at the last update
- LND updates every 10 min on an online channel
- Long inactive channels are a liability - especially if was online last at low miner fee period
- Avoid and prevent force closes by minimizing downtime and instability as a routing node
- to a sat/byte level where it can confirm within the CSV delay in case a breach transaction is broadcasted by the peer while the node is offline.
- The CSV delay can be set to be longer with:
lncli updatechanpolicy
- Anchor commitments by default (affects only new channels and both peers need to support the feature)
- Splicing and dual funding - extend the channel capacity in a single transaction
- Taproot - can save on sending from the multisig (~26 byte from the min 140 bytes)
- Taproot - funding from multisig wallets will be the same cost as from single sig wallets (slightly more expensive for single-sig)
- ELTOO - multiparty channels and channel factories