Reading Assignment: Lightning Basics

  1. The lightning channel could be refilled as many times you like.

2.Advertised channel are visible and public to the network whilst Non-advertised channels are not always visible (these ones are usually used in laptops , phones , tables because they not always online).

3.Buffer capital is a certain amount of funds needed to make sure that the nodes are balanced enough to not to let the communication fail. (balanced in both sides)

4.Onion routing is a specific routing where it adds a significant layer of privacy on top of the channel. Nodes would only know identities of previous and next node.

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1. How many times can you refill your LN channel?
Practically unlimited as long the channel kept with some funds so it will never get closed.

2. What’s the difference between Advertised and non-advertised channels?
From my perspective, Advertised channel are those that are a lightning node that can be used has a payment route for other participants.
While a non-advertised channel are the end users that requires a lightning node to establish a payment route with other participants.
Kinda like SPV’s and Nodes right?

3. How does Buffer capital work?
Its a minimum fund that a channel should lock (maintain) in order to not get closed in the overall flow of the network, by doing this practice, they avoid a channel exhaustion and routing failures.

4. What is onion routing?
A method to keep the privacy and censorship-resistance along the payment multi-hop path.
When a payment is send from a channel that has not opened a channel with the receiver, it will use other users channels to establish the most short path to route that payment, but in order to keep the privacy of those “routing participants” the “onion routing” allows them to not expose themselves in the process, allowing them a censorship-resistance over the network.
Meaning, the data over the payment process will only show the identity of the last participant and the last receiver, but not the entire path that has been toked.

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  1. As many times as you want.
  2. Advertised channels are “published” to the network, such as gateway and bridge nodes. non-advertised channels are created when an end user wants to make a payment and connects to an advertised node.
  3. Buffer capital is the amount of money in your node to support sending and receiving amounts through other channels without running dry.
  4. Onion routing is where there is not a direct route to an endpoint but is routed through other servers/routers that only know their predecessor and outbound-node so any trail is lost.
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As many time you want.

Advertised channels are routing channels thats is always running to be chosen as a route to process a payment.
Non-advertised channels are smaller devices like phones and desktops from end users.

Routing nodes will aggregate inflows and outflows across many users so that overall flows to and from a routing node will be somewhat balanced.

Routing data through layers, the node only knows where the transaction came from.

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  1. How many times can you refill your LN channel?
    Unlimited times
  2. What’s the difference between Advertised and non-advertised channels?
    Advertised channels serve more the purpose of openly provide routing services for everyone. Non-advertised channels are more focused on end users. They are only intermittently available.
  3. How does Buffer capital work?
    It ensures that there is enough balance to perform routing through nodes. This way efficiency can be ensured.
  4. What is onion routing?
    Onion routes allows each participating node to only see the predecessor and successor. This ensures more privacy.
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  1. As much as you want
  2. Advertised are visible in the network graph and can ve used to route payments, even without hints, which is not the case for non-advertised
  3. Buffer capital is protection against routing failures due to insufficient fund on one side of the channel
  4. Onion routing means that routing party only know their immediate successor and predecessor, knowing not if they are sender or the final recipient of the payment
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  1. How many times can you refill your LN channel?

Unlimited refills, as long as funds are available

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

Advertised channels will be visible in the lightning network and non-advertised channels will not be visible

  1. How does Buffer capital work?

Buffer capital works where by routing nodes supplies flow of funds to handle periods of imbalance in the Lightning network

  1. What is onion routing?

Onion routing is for multi-hop payments where intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route on the Lightning network

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

A channel can be refilled as many times as a user wants. It works like a bank account or a prepaid card. Why should there be a refill limit? :wink:

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

The majority of lightning nodes (e.g. smartphones, user’s PCs) with an intermittent internet connection aren’t suitable for routing, in fact they are not visible in the lightning graph. These channels can still be used thanks to some routing “hints”. Even if not advertized, these nodes will probably be the ones used most, because they are the majority.

Advertized ones, are channels that want to be used for routing and earn fees.

  1. How does Buffer capital work?

In order for transactions to be routed through a channel, the channel must have enough capital to fulfill the requested amount. E.g. if Alice wants to send to Bob 0.1 BTC and the payment has to be routed trough Charly, Charly must have at least 0.1 BTC in the channel available to route the request.

  1. What is onion routing?

For multi-hope payments (where the payments must go through different channels to reach the destination) intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route.

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  1. A Lightning Channel can be refilled as often as you like, but it costs an onchain transaction.
  2. Non-advertised channels are end users. Advertised channels are visible in the network and are routing channels.
  3. Buffer captial is used to maintain the in- and outflow of payment channels.
  4. Onion routing is used for privacy. The intermediate node only knowes the identity of next and previous node in the payment path.
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  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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