You will need to add some sats to the wallet to open a channel (incur an on-chain tx fee) and then spend some sats (zap people, buy items, use a service like boltz.exchange to send your sats to L1) to make room for incoming zaps. That's true of all non-custodial wallets.
How does this work without having to run your own node? It runs a light node on your phone, right? And can you still receive money even when the app isn’t online? Is it a good option for a nostr wallet? nostr:npub1xnf02f60r9v0e5kty33a404dm79zr7z2eepyrk5gsq3m7pwvsz2sazlpr5
Discussion
Awesome bc I’m still using Alby free credits and I need to upgrade. I don’t really want to pay for a subscription for a custodial lightning service but I also am not going to realistically learn to run my own full lightning node that quickly. Can you explain that part about spending sats to make room for zaps though? I don’t really understand how channels work so what are the limitations?
Think of a lightning channel like a bucket full of water. The bucket is the channel and water is sats (Bitcoin). When you first buy the bucket, it is full of water, so you can't add any more water to it (receive transactions). But you can pour water out (send transactions) which frees up room in the bucket! You can pour out and add water as many times as you like.
So, I would suggest receiving $5-$20 to start, this gives you plenty of room for zaps. Then either zap some people or use a service like boltz.exchange which will (in a non-custodial way) spent from your lightning channel and return the funds to you on-chain for around 1% fee plus the cost of an on-chain tx. You start with $20, you end up with a channel which can receive roughly $19 and you also have $19 stored on-chain.
Sounds complicated, but becomes intuitive once you've done it a few times.
There are also plenty of free custodial lightning services, coinos is a popular one right now. Then you don't have to worry about lightning channel sizes, etc. Simpler, but you are placing trust in a custodian who may steal your funds. That's fine for zaps, not great for your monthly rent.
Ok so if you want to have the capacity for 100,000 sats you could open up a channel with 100,000 and then send most of it back to yourself on chain? Also, you get a seed phrase for a lightning wallet right, so it’s like a hot wallet? If you break your phone, you can just reboot it on another phone?
As for the custodial services, I’m not super concerned about custody with small amounts. Is it the case then that custodial lightning wallets are still safe from a regulatory perspective, but WoS and Phoenix just backed out of America preemptively bc of the Samourai stuff?
> Ok so if you want to have the capacity for 100,000 sats you could open up a channel with 100,000 and then send most of it back to yourself on chain?
Yes exactly
> Also, you get a seed phrase for a lightning wallet right, so it’s like a hot wallet? If you break your phone, you can just reboot it on another phone?
Yep
> Is it the case then that custodial lightning wallets are still safe from a regulatory perspective, but WoS and Phoenix just backed out of America preemptively bc of the Samourai stuff?
Exchanges are required to do certain KYC stuff, but that's US law, and many of these custodial wallets are outside the US. Are custodial wallets which offer no fiat conversion options exchanges? Debatable. All these regulations at present are aimed at exchanges, not users, I know of no situation where a user was prosecuted. There is legal ambiguity for exchanges and custodial wallets and so they are scared to serve US customers. Make sure you contact your representatives if these issues are important to you https://myreps.datamade.us/
Thanks so much! My last question is, you say open the wallet once a day to accept pending funds. Is this just good practice or is there actually a timeline on accepting those funds? What if you waited a week?
Zeus uses hodl invoices to make receiving zaps non-custodial. If you don't accept them within 24 hours, they expire. Essentially, they can receive a payment for you and then either complete it by forwarding it onto you or reject it, but they can't take the funds themselves. https://www.voltage.cloud/blog/understanding-hold-invoices-on-the-lightning-network
If you waited a week, the payment would fail, and whoever zapped you would receive their sats back. Or, to speak more correctly, their zaps were never sent in the first place.
I just thought of a new question. As long as you claim the payment within 24 hours, are the funds in your wallet at risk if you go an extended period of time without opening it?
Since they are in lightning, yes, in theory, you should open your wallet once every week or two depending on the settings of your channels. If you use an LSP, and you trust your LSP not to rug you, don't need to worry about it. In practice, the attack where somebody tried to rug you by force closing a channel with the incorrect amount of unheard of. I don't know anybody it's happened to. If they are caught (by the blockchain/your wallet), there is a significant penalty, and it's all automatic, so there's really no incentive to try to cheat the system.