lightning-dev

CheckTemplateVerify Does Not Scale Due to UTXO's Required For Fee Payment

CheckTemplateVerify Does Not Scale Due to UTXO's Required For Fee Payment

Original Postby Peter Todd

Posted on: January 30, 2024 08:40 UTC

Lightning Network channels, currently functioning differently from initial expectations, employ a fee structure where commitment transactions pay a minimal fee-rate, which can be increased to the required amount through anchor outputs or Child Pays for Parent (CPFP) methods.

This arrangement is integral to both existing Lightning channel operations and proposed future enhancements, with the latter suggesting that commitment transactions might not pay any fees upfront. In real-world application, it's common for the initiator of a Lightning channel to not bear the majority of transaction fees.

A recent personal experience highlights this issue: while attempting to close a Lightning channel, a technical glitch led to a cooperative closure failure. The resulting commitment transaction, set at a fee-rate below most nodes' minimum relay fee, left the recipient with approximately 2 million satoshis effectively stuck unless they opted to use CPFP to expedite the process. This would force the recipient to incur the majority of the costs, despite being on the receiving end of the transaction. Such incidents demonstrate the departure from the original principle that the channel initiator should cover transaction fees.

The debate on whether the initiator should pay transaction fees is separate from the implementation of Replace-By-Fee (RBF) in Lightning channels. To integrate the initiator-pays concept, one could negotiate a minimum fee rate to be deducted from the initiator's balance. This proposal is not gaining traction as it presents no incentive for recipients to minimize fee rates—highlighting a fundamental design challenge in balancing cost responsibilities within the Lightning Network. For further information on these concepts and their implications, Peter Todd's insights can be found at peter todd. Todd can be contacted directly via email by removing the last character from 'peter' in his email address provided.