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Zeus claim that automatic backups are made for the lightning channels and are stored on their servers (encrypted by your keys supposedly). How does that work? Is the whole channel state backed up? Is there a danger a recovery may try to recover an old channel state, triggering a penalty transaction if for some reason last backup after a lightning transaction fails?
Here is the Zeus documentation about how backup / restore procedure for embedded node.
How does that work? Is the whole channel state backed up
Yes. These SCB backups do not need to be done every time you do a tx. They just need to be done every time is open or closed a channel.
Now, keep in mind that what is backup up on their servers is just a base64 string (same as is doing Amboss with Thunderhub for example). But that string is totally useless without your 24 words seed that is generated locally by your device and is supposedly you save it previously, when you created first time the node.
Nevertheless, you can disable the automatic backup to Zeus servers and save that string on your local device or wherever you want. That string is used later yo restore your channels status, and indeed, is automatically triggering the force closure of the existing channels. That is NOT a penalty transaction, is just a normal force closure.
penalty is when you want to cheat and broadcast an old stage of that backup. But that's not the case.
During my intensive tests with many wallets I've recovered myself many times a Zeus node, inclusive I used the same string into Blixt wallet (that is also an embedded LND node) and all worked as it supposed to be: force closing nicely the channels, funds recovered onchain after the expiration of the grace period.
Conclusion: Zeus is offering an excellent service for automated backup of your LN channels. It is done every time you open or close a channel, so is keeping the correct state of them.
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Do you know how this works? Isn't force close just broadcasting the latest unbroadcasted transaction? Because if it is so then I imagine you do need the backup after the last transaction, not just when opening and closing a channel.
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Good question. I don't know exactly all the technical details (I mean how the code is executed), but I will try to explain it from my own experience running various nodes for years.
Isn't force close just broadcasting the latest unbroadcasted transaction?
Yes. In theory yes, you should have a backup for the channels with all movements, like CLN is doing. LND is doing SCB, static channel backup.
SCB contains information about each of your peers, how to reach them and your channels. With that information, when you trigger the restore procedure, it contact the peers and negotiate the closing fee and the balance.
If your peer nodes do not receive the answer from your node (is dead), then will consider their last commitment as true and initiate with that information the closing. That's why there's a grace period of 144 blocks in which you can reclaim another status (if you have it) and rebroadcast it again. Otherwise will be a cooperative closing, when both peers are online and send the last correct status they have it.
So yes, you are entitled to worry that a peer can initiate a force closing with another balance and steal your funds. Is better to choose wisely your peers, especially for a private node like Zeus, that for the moment do not have an option for watchtowers. It is in the pipeline but not so soon.
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