Author: ZmnSCPxj 2019-12-03 08:26:22
Published on: 2019-12-03T08:26:22+00:00
In a recent email exchange, ZmnSCPxj discussed the use of watchtowers in the Lightning Network. The update transaction for a settlement can be posted at any time, and the only transaction that can spend it is the correct settlement. However, if a user's Lightning node is destroyed, then there could be a total loss of funds. To prevent this, the blob containing the update, settlement, and transaction that spends the output of the settlement can be sent to a cold-storage address controlled by different hardware. This would allow the watchtower to place part of the funds (excluding those in HTLCs) back into a cold-storage address. While this is an edge case, it may be worth considering for certain scenarios. The use of `SIGHASH_NOINPUT` expects fees to be paid by another output, simplifying the implementation of watchtowers and increasing the feasibility of deploying a watchtower network.
Updated on: 2023-06-02T21:53:21.488558+00:00