Author: ZmnSCPxj 2021-07-05 23:26:23
Published on: 2021-07-05T23:26:23+00:00
The author discusses the possibility of proving balances held on the lightning network, but concludes that it may not be generally possible. However, every channel is anchored on-chain, which serves as proof of the existence and size of the channel. The two participants in the channel can sign a plaintext containing their node pubkeys and how much each owns, with one participant serving as the custodian. If the counterparty is a true third party, there is no incentive to lie about its money, especially if the counterparty is another custodian who wants proof-of-reserves. There is a disincentive to underreport, and the only case acceptable to both custodians would be to honestly report their holdings in the Lightning channel. However, the author notes that Lightning channel states change fairly quickly, and there are possible race conditions due to network latency where a custodian Lightning node is unable to "freeze" a snapshot of its current state and make an atomic proof-of-reserves of all channels. This may pose practical problems for proving balances held on the lightning network.
Updated on: 2023-06-15T00:07:43.935724+00:00