All your Lightning Network terms explained in one place.
If two assets of the same kind are combined, this is called an asset merge.
If an asset is divided into two parts, it is split.
Atomic refers to an action that is either completed in its entirety, or not at all. Lightning payments are atomic across routes, in that they either reach their destination or never leave their origin. Submarine swaps are atomic, in that either the swap succeeds or funds never leave their origin, and AMPs are atomic in that either all shards arrive at the destination, or none.
Atomic Multi-path Payments (AMP) is a payment standard that allows a payment to be made over multiple channels. Unlike MPP each individual shard has its own payment hash, which allows for payments being made atomically. AMP also allows for static invoices and to send funds solely using the recipient's public key, as well as attaching messages to these payments.
An encoding scheme for Bitcoin addresses conceived by Satoshi Nakamoto, consisting of both uppercase and lowercase letters and numbers. An example of a Base58 encoded address: 1JqDybm2nWTENrHvMyafbSXXtTk5Uv5QAn
Basics of Lightning Technology (BOLT) is the name of the Lightning Network protocol standard. A given implementation of the Lightning Network needs to follow all rules laid out by the BOLT standard to be considered a full Lightning Node.
Chantools is a channel and fund recovery tool for -> Lightning nodes written by Oliver Gugger.
A circular rebalance is a payment from a node to itself through an external path, often used to shift balances from one channel to another.
In the context of cryptography, committing refers to the act of proving that certain data exists at a point in time, without necessarily revealing the data. Typically, this is done with a hash of the data. Only an entity that knows about the full data would have been able to produce a hash of it, thus, proving its existence.
Check Sequence Verify is a functionality in Bitcoin that allows us to lock Bitcoin relative to its input transaction. It is an important part of the mechanism of a sweep transaction. Defined in BIP 112.
Child Pays For Parent is a method of effectively increasing the fee of an unconfirmed on-chain transaction (parent) by spending one of its outputs with a fee high enough to cover both the parent and the child transaction. To collect the high fee of the child transaction, a miner now has to include both the child and the parent transaction into a block. Unlike RBF this mechanism can also be used by the recipient of a transaction.
Eltoo (from L2) is a proposed upgrade to the Lightning Network, enabling new functionalities.
An explorer is software or a service that lets you inspect transactions, nodes, and network metrics. There are explorers focusing mainly on on-chain data as well as Lightning Network explorers.
When a channel peer is unreachable, or when there is a fundamental disagreement over the state of a channel, the channel needs to be force closed by either party. A force close broadcasts the commitment transaction.
Fuzz testing is the methodology of feeding invalid data to software with the intention of finding bugs and vulnerabilities.
The Lightning gossip network is used to broadcast information about channels and peers.
Inbound capacity is the amount of satoshis a node is able to receive through a given channel or all channels together. A channel's inbound capacity and outbound capacity together define a channel's total capacity, as defined at its creation.
Keysend allows users of the Lightning Network to send funds to a node's public key.
A Lightning Service Provider (LSP) provides commercial liquidity and routing services on the Lightning Network. For example, a LSP might provide funds for automatic channel opening, inbound liquidity or routing information.
Macaroons are bearer credentials that allow for detailed attenuation as well as delegation.
A Merkle tree is a data structure that commits to multiple sets of data using a single identifying hash, the -> Merkle tree root. The data that the tree commits to lies at the leaves. Two leaves are hashed into a node, two nodes are hashed into a higher level node. The top node makes up the root.
A millibitcoin is a thousandth of a bitcoin, or 0.001 BTC.
A multisignature bitcoin address is an address from which bitcoin can only be spent with multiple signatures. A multisignature address can be m of n, meaning that n keys exist, and m signatures need to be present. Lightning channels use 2-of-2 multisignature accounts.
Noise is the encryption protocol used to establish and authenticate communications between Lightning nodes.
Off-chain is any transfer or action taken on the Lightning Network. Such transactions are not settled directly on the Bitcoin blockchain.
On-chain transactions and actions are those settled directly on the Bitcoin blockchain, for instance a traditional Bitcoin transaction made to a Bitcoin address.
An onion address is an identifier, similar to a url, pointing to a -> onion service. It usually comes in the form of a long, all-lowercase string ending in .onion.
Onion routing describes the methodology of encrypting messages inside of encrypted messages, which are passed from hop to hop. Each hop is only able to decipher messages intended for itself, not any predecessor or successor. Onion routing is used to transfer data in the Tor Network as well as to pass on payments and messages in the Lightning Network using Sphinx.
Outbound capacity describes the amount of satoshi a node is able to send through a single channel, or all channels together.
Partially signed Bitcoin transactions (PSBT) are a standard on how to pass incomplete, or partially signed transactions between wallets. This can be useful for multi-signature wallets and complex scripts and is used in LND to handle watch-only wallets.
A peer-to-peer network is any system not relying on a leader, in which connections are made directly between peers without intermediaries.
Polar makes it easy to locally simulate the Lightning Network for testing purposes. Developed by Jamal James.
A private channel is a channel that is not announced to the network. As such it cannot be used for routing, and when receiving payments through a private channel its information needs to be included in the invoice.
Probing is the act of attempting payments through the Lightning Network without settling them in an attempt to discover routes or reveal channel capacity.
Point Time-locked Contracts (PTLCs) are a proposed improvement on HTLCs. It uses homomorphic one-way functions instead of hashes. When using PTLCs, there is no single preimage across a payment route, but instead each hop calculates its own secret. Using unique secrets per hop reduces the ability of an intermediary to trace the route a payment takes in the Lightning Network.
Replace by Fee is a mechanism that allows the sender of an unconfirmed on-chain Bitcoin transaction to replace the transaction with a higher fee transaction in the hope of getting it included into a block sooner.
RevokeAndAck is the process of revoking a previous commitment transaction and acknowledging a new state in a channel. It's a fundamental piece of how payments are forwarded and canceled in the Lightning Network.
Satoshi Nakamoto is the pseudonym behind the creator(s) of Bitcoin.
Static channel backups (SCB) contain information about each channel peer and how to reach them. They are encrypted with a node's public key and can be used to request a remote force closure of a channel in the event of a catastrophic failure.
A seed phrase is a collection of typically 12 to 24 words from which cryptographic keys are derived. This makes it possible to back up a series of private keys, for instance for multiple bitcoin addresses in a wallet with a single piece of static information. LND uses aezeed to derive private keys from a seed phrase.
A sidecar channel refers to a channel purchased on Lightning Pool for a third party. Sidecar channels allow an auction participant to buy channels for others, for example mobile wallets that are not participating in the auction process directly.
A Sparse Merkle Tree (SMT) is a data structure that, in addition to a normal Merkle-tree's ability to produce inclusion proofs, is able to provide non-inclusion proofs. This is achieved by placing an object at a leaf location defined by the binary expression of the SHA256 digest of that data. Each bit, of the digest, expresses the left-right traversal in a binary tree to locate the object. When the contents of many of the leaves are empty, many of the branches are null, leading to efficient computation during SMT generation and modification.
Funds held in some types of addresses have to be sweeped, meaning they have to be spent as soon as possible and sent to the user's main wallet. Mainly, this is done because they might otherwise not be recoverable in the event of data loss.
Taproot is a bitcoin transaction type introduced in November 2021 that allows for more advanced scripts, with major efficiency improvements relevant for the Lightning Network.
A Turbo channel is a channel accepted as valid with zero confirmations on the Bitcoin blockchain. It requires some trust in the initiator.
A unique asset is an asset that is not divisible, and cannot be exchanged for another asset of the same kind. This is contrary to fungible assets, such as money.
A wallet that is aware of balances and transactions, but does not possess the keys necessary to spend them. A watch-only wallet can create unsigned PSBTs which are then signed by the wallet holding the keys.
A watchtower consists of a client and a server. The client will share information relevant to channel breaches with the server, which will intervene in case they observe a breach on-chain. Watchtowers are needed in case the client is offline and unable to observe the breach themselves.
In the early days of the Lightning Network, most clients would not allow opening channels larger than 16,777,215 (2^24 -1). Today, channels exceeding this limit are called Wumbo channels.
A zombie channel is a channel that still exists on-chain and in the graph, but hasn't been active in a while and is unlikely to become active again. It is recommended to close such channels.