Reading Assignment: Lightning Basics

  1. Refills are unlimited.

  2. Advertised channels are available for routing and are visible in the network graph. Non advertised channels are not available for routing and are only accessible through the use of extra routing information.

  3. Routing nodes must provide sufficient capital to handle imbalances of inflows vs outflows. Insufficient buffer capital leads to periods of channel exhaustion and routing failures.

  4. Using onion routing for multi-hop payments provides added anonymity because intermediate nodes know only the identity of the predecessor node and the successor node.

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  1. Unlimited times
  2. Advertised channels can be seen on the network map or graph and are available for routing. Non advertised cannot be seen and are not automatically used for routing (but can be in some cases)
  3. Buffer capital refers to the amount held in the output part of the node. It needs to be sufficient enough to equal or be greater than all the inflows coming in at one time or it wont be able to routed through.
  4. Onion routing is an extra layer of privacy in that each node travelled through only know the node before itself and the one after (it sends to) and not the flows or direction other than that.
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  1. How many times can you refill your LN channel?
    As many times as you wish, there is no limit - in this way channels may be kept open for long periods of time (even years) to avoid repeated Bitcoin on-chain transaction fee each time an existing LN channel is closed and reopened.

  2. What’s the difference between Advertised and non-advertised channels?
    Non-advertised nodes will generally be user nodes (running on a smartphone, laptops etc). These nodes & channels will not be available for routing, not being publicly announced (or advertised) to the network and hence won’t appear in node/channel maps of the LN network. Whilst advertised nodes / channels are publicly visible and hence these public channels are directly available for payment routing.
    Non-advertised private nodes/channels are likely to form the majority of the network, and via extra routing information (“routing hints”) embedded in LN payment requests they will be accessible. In this way LN payments may be sent using a combination of hops over public (advertised) and non-public (non-advertised) channels.

  3. How does Buffer capital work?
    Each node must provide ‘buffer capital’ for the channels it has open. Buffer capital is reduced when transactions flow one way through the channel (outflows with Txs being sent) and increased when Txs flow the other way (inflows with Txs being received). Nodes that experience a predominance of transactions flowing in one direction will start to experience an imbalance in the buffer capital maintained and if a particular node’s channel buffer capital falls too low then the network will no longer be able to route transactions through this channel (i.e. if Tx value is to be potentially routed through a node is higher than remaining buffer capital for that node’s channel - which is called ‘channel exhaustion’). To avoid channel transaction failures, the node would have to add additional capital to the node’s channel buffer capital.

  4. What is onion routing?
    This is where that any node along the route will only know the identity of the immediately preceding node (who sent the transaction) and the next node (to whom the transaction is sent onto). This is important as together with ‘source routing’ (where the sender constructs the routing path) this gives privacy to the senders and receivers of transactions and hence increases censorship-resistance.

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Excellent answer sir! really well documented! keep it like that please! :muscle:

Carlos Z.

  1. You can refill the channel as often and with as much money as you want

  2. Advertised channel are used for routing which means they are propagating payments through the network and are visible in the network graph. Non-advertised channels can be seen as “endpoints” which do not propagate transactions and only “receive” money instead of “sending and receiving” payments. Non-advertised channels are mostly end user nodes (laptops, smarthpone) which are accessible through extra routing information.

  3. In order to run a “healthy” node which means your node must have enough balance, your node must have enough buffer capital so that in cases of heavy payments in one direction (more sending than receiving) the node is not running “out of money”. When your node has not enough buffer capital and gets out of balance during some time the routing will failure because it is not capable of propagate payments in the network anymore. This could lead to disconnecting of nodes from your node.

  4. Lightnight is supporting onion routing which means that nodes only know the identity of the node where the payment is coming from and the node to which the payment is going to. This provides enhanced user privacy.

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  1. Unlimited number of times.
  2. Non-advertised channels will be accessible through the use of so called ‘routing hint’ embedded in Lightning payment requests when advertised channels are visible in the network right away.
  3. Sometimes the funds flow more one way than the other and Buffer capital prevents the node from exhausting until the funds start going the opposite way.
  4. Onion routing is a privacy concept where the intermediate node knows only the node before and the node after.
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  1. Unlimited
  2. Advertised channels are available for routing and are visible on the network graph. Non-advertised channels are not available for routing except for when extra routing information (routing hints) are embedded in payment requests.
  3. Capital in reserve inside the channel
  4. Similar to Tor knowing only who sent you the request and who you forwarded it to.
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  1. Unlimited
  2. Non advertised is not always available, while advertised is put into the network and always online.
  3. For the ingoing and outgoing transactions there must be enough BTC in the channel to handle the transactions.
  4. The nodes only know the sender and receiver on their point. So When the channel consisits of 10 nodes the final node doesn’t know who the original sender is.
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Both nodes are online most of the time. If they are advertised or not only means if they are visible in the network or not :slight_smile:

The endpoints are aware of the sender and receiver, only the intermediate nodes are not aware of that and only know where to forward the request :slight_smile:

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1. How many times can you refill your LN channel?
There is no limit on refilling a channel. It is good to refill rather than to open a new one . This avoid the costs to put it on the blockchain.

2. What’s the difference between Advertised and non-advertised channels?
Basically non advertised are end-users, just receiving the benefits from the LN; Advertised are basically nodes that are moving the funds and must be available online.

3. How does Buffer capital work?
That is basically a reserve of funds from a routing node that is used to speed up the operation when funds on the channels are not available.

4. What is onion routing?
A channel using TOR to add an extra layer of privacy.

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You can refill it as much as many times as you want to

An advertised channel will be like the gateway routing node. The end users how ever with only intermittent internet access will be non advertised on the network so they will not be broadcasted every time they make a small payment.

Nodes need to maintain enough buffer capital sith them for the periods of big imbalance in too much sending or receiving of funds, if nodes to not have enough buffer capital it will need to node exhaustion and routing failures which will lead to that node being disconnected by other nodes, there for people have an incentive to maintain a good amount of buffer capital in their nodes.

The lightning network uses source routing and onion routing to protect users identities and stay censorship resistant.

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  1. How many times can you refill your LN channel?
    As many time needed but it follows the funds available in the source account
  2. What’s the difference between Advertised and non-advertised channels? An non-advertised channel is more on laptop, smartphone and are not explicit in routing tables. They are temporaries and change its zone (AP) so changing IP also. I see them as private networks and may require routing hints for path. Advertised are explicit in the routing management because they are static like a server. With NearBy of Google, I think it we be without Internet and Lightning will be a P2P even with very far zone like desert.
  3. How does Buffer capital work?
    need an amount of btc in a channel to allow forwarding of a transaction to fulfill an order at the end of the routed path so a balance can be transfered. The Aggregate inflows and outflows across many users so that overall flows to and from a routing node will be and must be balanced. Essentially, within a given period of time, some of a routing node’s users will be spending, while others will be refilling that amount needed is the buffer or BTC required to allow the routing pathway to work.
  4. What is onion routing?
    Onion routing is used in multi-hop payments with intermediate nodes. The intermediate nodes only know the the predecessor and successor in the route.
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  1. You can refill your LN channel as often as you like. However, refilling is an onchain activity and so when fees are high onchain you don’t want to be doing this frequently. An analogy might be refilling the fiat cash in your wallet from an ATM. You can do it as often as you want but it is more cost efficient to pull out $100 ocassionally so the $3 fee is small compared to the cash you are withdrawing, rather than withdrawing $20 five times and paying $15 in fees.
  2. Advertised nodes are ones that are viewable to all and ‘advertise’ the fact that they can be used for routing payments. Other nodes like an end user might have on their smart device allow the user to connect to the network when required but they are not always up and as such are not a reliable way of routing funds so these nodes are ‘non advertised’.
  3. Buffer capital is the amount of BTC you have available on your node. The larger the buffer capital (BTC balance) the larger the transaction size your node can pass through and the better it can tolerate short term inflow/outflow differences. We dont want our node to run out of capital or other nodes will deem us unreliable and rout around us.
  4. Onion routing is a protocol where each node only knows the the nodes on either side of it. i.e. it does not know the originator or the final recipient. The node is a pass through which increases privacy and security.
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  1. How many times can you refill your LN channel?

Just as bank or cash accounts can be emptied and refilled over and over, Lightning channels can as well.

  1. What’s the difference between Advertised and non-advertised channels?

Non-advertised payment channels are only intermittently available and not used for routing or advertised to the broader network.

  1. How does Buffer capital work?

In the event that funds happen to be moving in the same direction (e.g. more spending than receiving), channel exhaustion may occur (when a node has no funds remaining in a channel) causing routing failures. In these situations, a routing node must maintain enough “buffer capital” to be able to wait until the flow of funds reverses and channels return to a more balanced state.

  1. What is onion routing?

Intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route. Importantly, the combination of source routing and onion routing protects the identities of payment senders and receivers so as to enhance user privacy and censorship-resistance.

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  1. You can refill your Lightning Network Channel as many times as you want.

  2. An advertised channel is available for routing, is visible on the network and is nearly always online. A non-advertised channel is not usually available for routing, are usually end users and only online part of the time.

  3. The buffer capital is the funds used by a node to maintain liquidity during periods of inflow/outflow imbalance.

  4. Onion routing is a privacy measure whereby each intermediate node on a payment route knows the identity only of the previous and the next node.

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  1. How many times can you refill your LN channel?
    you can refill them as many times as you want

  2. What’s the difference between Advertised and non-advertised channels?
    Advertised --> available for routing, are always up/online
    non-advertised --> used for enduser, are only part time online

  3. How does Buffer capital work?
    Buffer provide liquidity on a routing node to handle inflow/outflow imbalance

  4. What is onion routing?
    intermediate nodes knows where to route next. is better for privacy. they only know the nodes on the next side. its used for multi hops. so you can not find out the full route which it taked because it only knows the prenode and the node where it goes to.

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1. How many times can you refill your LN channel?

Just as bank or cash accounts can be emptied and refilled over and over, Lightning channels can as well.

2. What’s the difference between Advertised and non-advertised channels?

Non-advertised channels are channels of end-users, not used for routing, while advertised channels are established between nodes that are typically always online.

3. How does Buffer capital work?

In situations where nodes experience an imbalance of incoming vs. outgoing liquidity streams, they need to have enough buffer capital to be able to wait until the flow of funds reverses and channels return to a more balanced state.

4. What is onion routing?

With multi-hop payments, intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route.

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  1. You can refill your lightning channel indefinately - just lika a bankaccount
  2. An advertized channel is broadcasted to the network, and can be found by client of the lightning network - a non-advertized channel is not broadcasted - typically a channel bewteen an end user and a gateway node
  3. The Buffer capital is what ensure the the lightning node can always service incoming and out going transactions by having enough capital (BTC) stored in it’s channels
  4. Onion routing is when the nodes only know of the nodes immediately before or after them in the complete payment route, no matter how many hops it consists of
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  1. You can refill your lightning channel as many times as you like.
  2. An advertised channel are available for routing and are always online while non-advertised are most often the client/end-user and are by default not advertised, which means they are not used for routing and are most often a mobile device such as a laptop or mobile.
  3. This is the reserve capital that are used when funds on the channel are not available.
  4. Only the identity of the predecessor node and the successor node are known and the complete route is not. Like tor. This is a privacy feature as it makes it more or less impossible to know the actual sender and receiver. The final node will not know the original sender.
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:zap: Lightning Basics :zap:

  1. How many times can you refill your LN channel?
    For as long as your LN channel is not closed (manually or automatically) you can refill and even resize it as often as you please.

  2. What’s the difference between advertised and non-advertised channels?
    While channels that do not advertise their existence to the network can not be used for routing and are often connected to end users whose devices might be online only intermittently the advertised channels can be easily discovered on the network and used for routing. The latter are visible on the network graph whereas the former require additional information (hints) to be utilized.

  3. How does buffer capital work?
    Buffer capital ensures that a node has enough liquidity to route payments regardless of whether the inflow and outflow of money are (more or less) balanced or not. When funds are mostly flowing out the node has to tap into that reserve until funds are coming in again as well. A node that doesn’t have sufficient buffer capital to provide liquidity for the number and volume of channels it is supposed to handle will experience channel exhaustion and subsequently routing failures. When this becomes to frequent the network will route around such nodes or even disconnect from them.

  4. What is onion routing?
    Onion routing is a way to increase the privacy of transactions through encrypting them with several layers (hence :onion:) that can only be peeled of (i.e. decrypted) one by one by the routing nodes. Through this method each node can only know the previous and the next node on the route but not the origin and the destination of the transaction simultaneously if the route has enough hops. This way of routing traffic is most prominently implemented in T(he) O(nion) R(outer) network.

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