Greenlight / phoenix censorship risk question \ stacker news ~lightning

Greenlight / phoenix censorship risk question

255 sats \ 5 comments \ @RedRadish688 24 May lightning

Hi all,

I am trying to better understand the trust model and censorship risks I have with solutions like blockstream greenlight or phoenix wallet.

From my understanding the wallets always store the last channel state on my phone. So if one day greenlight / acinq decides to censor / shotgun kyc me, I could just post a channel force close transaction from the data stored on my phone, without going through their api. Is that correct?
To take it one step further, if at the time of censorship I lose my phone, I can only restore the channels through their api using my seed backup. Therefore I have no way to circumvent their censorship. Is that correct here?

So in summary I have 100% self custody as long I have the wallet on my phone with all data, but in the case of wallet recovery I am 100% relying on them to behave well.

Thanks in advance for all replies.

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264 sats \ 1 reply \ @leo 25 May

Yes, if they were to become unavailable or shut down, you could "force close" your channel and redeem the sats onchain after a waiting period.
Yes, without the data on your phone you lose the pre-signed commitment transactions, and can't close the channel at all. You could wait for them to close the channel, but without the data on your phone you wouldn't be able to dispute outdated force close transactions.

There are other censorship risks, too. Not sure about Greenlight, but Phoenix somewhat sees what destinations you are sending funds to, and they could selectively block them. Maybe that's a more realistic kind of censorship that you'd expect to actually see one day.

8 sats \ 0 replies \ @RedRadish688 OP 25 May

Thank you for the reply. Yes, good point regarding them being able to censor destinations. I see how this can be another realistic scenario.

30 sats \ 2 replies \ @TonyGiorgio 25 May

In theory there could be third party watch towers but nobody's really deployed those yet.

0 sats \ 1 reply \ @RedRadish688 OP 25 May

So in this case the watchtowers would also store the channel state backups?

30 sats \ 0 replies \ @TonyGiorgio 26 May

They would watch the chain to make sure the funds were not improperly redeemed by the LSP. They would submit the redemption transaction giving you your funds back (all channel funds actually).