I have about 4m sats in #Phoenix and they gave me 3m additional incoming liquidity. The truth is I hardly use it though, and I have to wonder how they feel about having that liquidity tied up in an unproductive way.
Discussion
That’s a lot of liquidity! I wonder if they are able to initiate splice out transactions. That could be an interesting model.
Zeus only gave me 100k but then I balanced it up.
Over the course of an entire year I’m sure you’ll use it more than you think, and even a 0.5% return on Bitcoin in that manner is phenomenal.
You might be right. They've collected a few thousand sats in fees from me since May. If my usage goes up they'll be taking them in with their monopoly on routing for me.
Haven't used phoenix yet, but if they route through these channels it would help them. A channel with one-sided liquidity is kind of useless for routing. However, I guess they wouldn't do it if it made no sense for them.
It's a private channel, so there's no routing. The way it works is the Phoenix app runs a node that connects only to the ACINQ node. You send them an on-chain transaction and they take it and open a channel to your app node for a larger amount and push the amout you sent to your side. That is the only channel you'll have, but you can splice in more sats if you need it using the same process.
All payments route through them and they handle all the lightning management stuff, but they also have a monopoly over all your transactions and can dictate whatever fees they want. Currently it's 0.4% plus 4 sats base fee so it's too expensive for zapping imo.
I guess for now it makes sense, but I bet they'll have some policy about it in the future. I can't imagine it's sustainable to provide an extra 75% liquidity on every channel.
Thanks for the in-depth explanation. I might look for another zap wallet then 😅
I emailed Phoenix about my concerns. Here is their response:
Wait.
Would they close my channel if I’m not using it?
I just want to sit on it. And I can’t zap from it, otherwise it’d be much more active
No way to know since they "voluntarily" won't give specifics. Might want to use it occasionally so it doesn't look completely abandoned.
"latest advancement in technology" they're talking about is splicing. They can take out their liquidity without closing the channel. You bitcoin stays put, unaffected. You'll just lose inbound liquidity, but it was never yours.
Transfer Sats out to another wallet then back in every 1-2 months. Will that prevent closure?