Nostr Web Client

If a channel is closed properly (cooperatively or via the latest state), your funds are safe. However, if a node is compromised or a malicious party tries to close a channel with an outdated state, this is where the importance of watchtowers or monitoring your channels comes in. They help ensure you can claim your rightful funds by broadcasting the correct state.

J₿INZALA | ∞/21M⚡️ 1y ago

How is the funds that I own on a node allocated to just me? Is it locked there? If a channel has a limit of 10m sats open and I keep 5m sats, can whole 10m move to the other side of the channel or will 5m be locked to only if I move the sats?

Sorry getting a bit confused as I know how to open and close channels and how lightning works, but I don’t understand the self custody part of it - OneKey does self custody cold wallets for lightning but it never made sense to me, besides yes we have to use our private key to sign for a transaction, but my confusion is does my private key itself hold the funds locked in a channels capacity or how does that work, as in bitcoin L1 it says in the outputs on a public address I own.

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Discussion

₿lockchainYog丰 1y ago

In a Lightning channel, your funds are split between you and the counterparty. For a 10M sat channel where you hold 5M sats, your 5M is locked to you and cannot move to the other side unless you sign a transaction to update the channel state.

Your private key doesn’t directly “hold” the funds but is essential for signing updates to the channel state. The channel funds are locked in a multi-signature address on the Bitcoin blockchain, and both parties must sign to update or close the channel.

Self-custody here means you control your private keys, so you have full authority over your funds and can close the channel at any time to claim your portion on-chain. Tools like OneKey make managing this easier by securely storing your keys.