Hosted channels were originally thought of as being custodial all the time, which probably explains why proponents of them went on to build ecash (and why they weren’t taken up much by self-custody wallets)

But I think hosted channels do have a place among LSP assisted self-custody wallets, because simply, you can’t self custody 20 sats of bitcoin.

The biggest benefit of hosted channels is to provide a lightning native experience that upgrades easily to self-custody. An LSP just needs to not broadcast the on-chain txn

The wallet client operates as normal. When you have a big enough balance, you can upgrade.

Hosted just for the period of time you need it. It’s a real path from zap onboarding to full bitcoin ownership.

Products for real people need to pick and choose from what we have for the best experience. More on that here