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channel-lifecycle.md

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Channel Lifecycle

To better understand the development workflow around Lightning channels, it is worthwhile to examine step by step the lifecycle of a payment channel. It contains roughly 4 steps:

  1. Adding a peer. Before a channel can be opened between two Lightning nodes, they must first be able to securely communicate with each other. This is accomplished with the ConnectPeer RPC method or connect on lncli.

    lncli connect <PUBKEY>@<HOST>:<PORT>

  2. Initiating Channel Opening. The OpenChannel method begins the channel opening process with a connected peer. Lightning assumes that this is led by a single party. The opening party can specify a local amount, representing the funds they would like to commit to the channel, and a “push” amount, the amount of money that they would like to give to the other side as part of an initial commitment state. One could imagine that instead of sending a standard Bitcoin transaction to pay a merchant, they could instead open a channel with the push amount representing the amount they want to pay, and optionally add some funds of their own, so that both parties can benefit from having a channel available for payments in the future.

    lncli openchannel --node_key=<ID_PUBKEY> --local_amt=<AMOUNT>

    Lightning Wallet App Open Channel

  3. Wait for confirmations. To prevent double spending attacks on the channel opening transaction, users should specify the --block lncli command line argument. So after initializing the channel opening process, it is often required to mine a few blocks:

    btcctl generate 6

  4. Close Channel. If either party in a channel no longer wants to keep it open, they can close it at any time with the CloseChannel method.

    lncli closechannel --funding_txid=<funding_txid> --output_index=<output_index>