diff --git a/daemon/chaintopology.c b/daemon/chaintopology.c
index 65932c233..e64fac2f3 100644
--- a/daemon/chaintopology.c
+++ b/daemon/chaintopology.c
@@ -39,6 +39,9 @@ struct block {
 
 	/* Transactions in this block we care about */
 	struct list_head txs;
+
+	/* Full copy of txs (trimmed to txs list in connect_blocks) */
+	struct bitcoin_tx **full_txs;
 };
 
 /* Hash blocks by sha */
@@ -77,7 +80,7 @@ static int cmp_times(const u32 *a, const u32 *b, void *unused)
 	return 0;
 }
 
-/* Mediantime is median of previous 11 blocks. */
+/* Mediantime is median of this and previous 10 blocks. */
 static u32 get_mediantime(const struct topology *topo, const struct block *b)
 {
 	unsigned int i;
@@ -93,24 +96,76 @@ static u32 get_mediantime(const struct topology *topo, const struct block *b)
 	return times[ARRAY_SIZE(times) / 2];
 }
 
-/* Fills in prev, height, mediantime. */
-static void connect_blocks(struct topology *topo, struct block *b)
+static void remove_tx(struct tx_in_block *t)
 {
-	size_t n;
+	list_del_from(&t->block->txs, &t->list);
+}
+
+static void add_tx_to_block(struct block *b, struct txwatch *w)
+{
+	/* We attach this to watch, so removed when that is */
+	struct tx_in_block *t = tal(w, struct tx_in_block);
+
+	t->block = b;
+	t->w = w;
+	list_add_tail(&b->txs, &t->list);
+	tal_add_destructor(t, remove_tx);
+}
+
+/* Fills in prev, height, mediantime. */
+static void connect_blocks(struct lightningd_state *dstate, struct block *b)
+{
+	const struct topology *topo = dstate->topology;
+	size_t n, i;
 
 	/* Hooked in already? */
 	if (b->height != -1)
 		return;
 
 	b->prev = block_map_get(&topo->block_map, &b->hdr.prev_hash);
-	connect_blocks(topo, b->prev);
+	connect_blocks(dstate, b->prev);
 
 	b->height = b->prev->height + 1;
 	n = tal_count(b->prev->nexts);
 	tal_resize(&b->prev->nexts, n+1);
 	b->prev->nexts[n] = b;
 
-	b->mediantime = get_mediantime(topo, b->prev);
+	b->mediantime = get_mediantime(topo, b);
+
+	/* Now we see if any of those txs are interesting. */
+	for (i = 0; i < tal_count(b->full_txs); i++) {
+		struct bitcoin_tx *tx = b->full_txs[i];
+		struct txwatch *w;
+		struct sha256_double txid;
+		size_t j;
+
+		/* Tell them if it spends a txo we care about. */
+		for (j = 0; j < tx->input_count; j++) {
+			struct txwatch_output out;
+			struct txowatch *txo;
+			out.txid = tx->input[j].txid;
+			out.index = tx->input[j].index;
+
+			txo = txowatch_hash_get(&dstate->txowatches, &out);
+			if (txo)
+				txowatch_fire(dstate, txo, tx);
+		}
+
+		/* We do spends first, in case that tells us to watch tx. */
+		normalized_txid(tx, &txid);
+		w = txwatch_hash_get(&dstate->txwatches, &txid);
+		if (!w) {
+			bitcoin_txid(tx, &txid);
+			w = txwatch_hash_get(&dstate->txwatches, &txid);
+		}
+		if (w) {
+			add_tx_to_block(b, w);
+			/* Fire if it's the first we've seen it: this might
+			 * set up txo watches, which could fire in this block */
+			txwatch_fire(dstate, w, 0, &b->blkid);
+		}
+	}
+	b->full_txs = tal_free(b->full_txs);
 }
 
 /* This is expensive, but reorgs are usually short and txs are few.
@@ -279,32 +334,16 @@ static void topology_changed(struct lightningd_state *dstate)
 	for (i = 0; i < tal_count(topo->newtips); i++) {
 		topo->tips[i] = block_map_get(&topo->block_map,
 					      &topo->newtips[i]);
-		connect_blocks(topo, topo->tips[i]);
+		connect_blocks(dstate, topo->tips[i]);
 	}
 
-	/* FIXME: Tell watch code to re-evaluate all txs. */
-}
-
-static void remove_tx(struct tx_in_block *t)
-{
-	list_del_from(&t->block->txs, &t->list);
-}
-
-static void add_tx_to_block(struct block *b, struct txwatch *w)
-{
-	/* We attach this to watch, so removed when that is */
-	struct tx_in_block *t = tal(w, struct tx_in_block);
-
-	t->block = b;
-	t->w = w;
-	list_add_tail(&b->txs, &t->list);
-	tal_add_destructor(t, remove_tx);
+	/* Tell watch code to re-evaluate all txs. */
+	watch_topology_changed(dstate);
 }
 
 static struct block *add_block(struct lightningd_state *dstate,
 			       struct bitcoin_block *blk)
 {
-	size_t i;
 	struct topology *topo = dstate->topology;
 	struct block *b = tal(topo, struct block);
 
@@ -324,17 +363,8 @@ static struct block *add_block(struct lightningd_state *dstate,
 
 	b->hdr = blk->hdr;
 
-	/* See if any of those txs are interesting. */
 	list_head_init(&b->txs);
-	for (i = 0; i < tal_count(blk->tx); i++) {
-		struct txwatch *w;
-		struct sha256_double txid;
-
-		bitcoin_txid(blk->tx[i], &txid);
-		w = txwatch_hash_get(&dstate->txwatches, &txid);
-		if (w)
-			add_tx_to_block(b, w);
-	}
+	b->full_txs = tal_steal(b, blk->tx);
 
 	block_map_add(&topo->block_map, b);
 	return b;
diff --git a/daemon/lightningd.c b/daemon/lightningd.c
index 1448fb50e..c7d88f583 100644
--- a/daemon/lightningd.c
+++ b/daemon/lightningd.c
@@ -274,9 +274,6 @@ int main(int argc, char *argv[])
 	/* Set up node ID and private key. */
 	secrets_init(dstate);
 
-	/* Create timer to do watches. */
-	setup_watch_timer(dstate);
-
 	/* Initialize block topology. */
 	setup_topology(dstate);
 
diff --git a/daemon/peer.c b/daemon/peer.c
index 8880a2ccc..2aea897e6 100644
--- a/daemon/peer.c
+++ b/daemon/peer.c
@@ -795,7 +795,6 @@ void peer_watch_anchor(struct peer *peer,
 	w->theyspent = theyspent;
 	w->otherspent = otherspent;
 
-	peer_watch_setup(peer);
 	watch_txid(w, peer, &peer->anchor.txid, anchor_depthchange, NULL);
 	watch_txo(w, peer, &peer->anchor.txid, 0, anchor_spent, NULL);
 
diff --git a/daemon/test/test.sh b/daemon/test/test.sh
index c964ec96a..da7af5059 100755
--- a/daemon/test/test.sh
+++ b/daemon/test/test.sh
@@ -259,9 +259,6 @@ if [ -n "$TIMEOUT_ANCHOR" ]; then
     lcli1 dev-mocktime $TIME
     sleep 2
 
-    # Now we need to trigger it again (first time it gets the mediantime).
-    $CLI generate 1
-
     # Sometimes it skips poll because it's busy.  Do it again.
     TIME=$(($TIME + 1))
     lcli1 dev-mocktime $TIME
diff --git a/daemon/watch.c b/daemon/watch.c
index 001f7bd75..22d1a93e9 100644
--- a/daemon/watch.c
+++ b/daemon/watch.c
@@ -29,6 +29,7 @@
 #include "bitcoin/script.h"
 #include "bitcoin/tx.h"
 #include "bitcoind.h"
+#include "chaintopology.h"
 #include "lightningd.h"
 #include "log.h"
 #include "peer.h"
@@ -78,22 +79,6 @@ static void destroy_txwatch(struct txwatch *w)
 	txwatch_hash_del(&w->dstate->txwatches, w);
 }
 
-/* FIXME: This is a hack! */
-void peer_watch_setup(struct peer *peer)
-{
-	struct sha256 h;
-	struct ripemd160 redeemhash;
-
-	/* Telling bitcoind to watch the redeemhash address means
-	 * it'll tell is about the anchor itself (spend to that
-	 * address), and any commit txs (spend from that address).*/
-	sha256(&h, peer->anchor.redeemscript,
-	       tal_count(peer->anchor.redeemscript));
-	ripemd160(&redeemhash, h.u.u8, sizeof(h));
-
-	bitcoind_watch_addr(peer->dstate, &redeemhash);
-}
-
 struct txwatch *watch_txid_(const tal_t *ctx,
 			    struct peer *peer,
 			    const struct sha256_double *txid,
@@ -159,138 +144,71 @@ struct txowatch *watch_txo_(const tal_t *ctx,
 	return w;
 }
 
-struct tx_info {
-	struct sha256_double blkhash;
-	int conf;
-};
 
-static void insert_null_txwatch(struct lightningd_state *dstate,
-				const struct sha256_double *txid)
+void txwatch_fire(struct lightningd_state *dstate,
+		  struct txwatch *txw,
+		  unsigned int depth,
+		  const struct sha256_double *blkhash)
 {
-	struct txwatch *w = tal(dstate, struct txwatch);
-	w->depth = 0;
-	w->txid = *txid;
-	w->dstate = dstate;
-	w->peer = NULL;
-	w->cb = NULL;
-	w->cbdata = NULL;
-
-	txwatch_hash_add(&w->dstate->txwatches, w);
-	tal_add_destructor(w, destroy_txwatch);
+	if (depth != txw->depth) {
+		log_debug(txw->peer->log,
+			  "Got depth change %u for %02x%02x%02x...\n",
+			  txw->depth,
+			  txw->txid.sha.u.u8[0],
+			  txw->txid.sha.u.u8[1],
+			  txw->txid.sha.u.u8[2]);
+		txw->depth = depth;
+		txw->cb(txw->peer, txw->depth, blkhash, &txw->txid,
+			txw->cbdata);
+	}
 }
 
-static void watched_normalized_txid(struct lightningd_state *dstate,
-				    const struct bitcoin_tx *tx,
-				    struct tx_info *txinfo)
+void txowatch_fire(struct lightningd_state *dstate,
+		   const struct txowatch *txow,
+		   const struct bitcoin_tx *tx)
 {
-	struct txwatch *txw;
 	struct sha256_double txid;
-	size_t i;
-	
-	normalized_txid(tx, &txid);
-	txw = txwatch_hash_get(&dstate->txwatches, &txid);
 
-	/* Reset to real txid for logging. */
 	bitcoin_txid(tx, &txid);
-
-	if (txw) {
-		if (txinfo->conf != txw->depth) {
-			log_debug(txw->peer->log,
-				  "Got depth change %u for %02x%02x%02x...\n",
-				  txinfo->conf,
-				  txid.sha.u.u8[0],
-				  txid.sha.u.u8[1],
-				  txid.sha.u.u8[2]);
-			txw->depth = txinfo->conf;
-			txw->cb(txw->peer, txw->depth, &txinfo->blkhash, &txid,
-				txw->cbdata);
-		}
-		return;
-	}
-
-	/* Hmm, otherwise it may be new */
-	for (i = 0; i < tx->input_count; i++) {
-		struct txowatch *txo;
-		struct txwatch_output out;
-
-		out.txid = tx->input[i].txid;
-		out.index = tx->input[i].index;
-		txo = txowatch_hash_get(&dstate->txowatches, &out);
-
-		/* Presumably, this sets a watch on it. */
-		if (txo) {
-			log_debug(txo->peer->log,
-				  "New tx spending %02x%02x%02x output %u:"
-				  " %02x%02x%02x...\n",
-				  out.txid.sha.u.u8[0],
-				  out.txid.sha.u.u8[1],
-				  out.txid.sha.u.u8[2],
-				  out.index,
-				  txid.sha.u.u8[0],
-				  txid.sha.u.u8[1],
-				  txid.sha.u.u8[2]);
-			txo->cb(txo->peer, tx, txo->cbdata);
-			return;
-		}
-	}
-
-	/* OK, not interesting.  Put in fake (on original txid). */
-	log_debug(dstate->base_log, "Ignoring tx %02x%02x%02x...\n",
+	log_debug(txow->peer->log,
+		  "Got UTXO spend for %02x%02x%02x:%u: %02x%02x%02x%02x...\n",
+		  txow->out.txid.sha.u.u8[0],
+		  txow->out.txid.sha.u.u8[1],
+		  txow->out.txid.sha.u.u8[2],
+		  txow->out.index,
 		  txid.sha.u.u8[0],
 		  txid.sha.u.u8[1],
-		  txid.sha.u.u8[2]);
-	insert_null_txwatch(dstate, &txid);
+		  txid.sha.u.u8[2],
+		  txid.sha.u.u8[3]);
+	txow->cb(txow->peer, tx, txow->cbdata);
 }
 
-static void watched_txid(struct lightningd_state *dstate,
-			 const struct sha256_double *txid,
-			 int confirmations,
-			 bool is_coinbase,
-			 const struct sha256_double *blkhash)
-
+void watch_topology_changed(struct lightningd_state *dstate)
 {
-	struct txwatch *txw;
-	struct tx_info *txinfo;
+	struct txwatch_hash_iter i;
+	struct txwatch *w;
+	bool needs_rerun;
 
-	/* Maybe it spent an output we're watching? */
-	if (is_coinbase)
-		return;
+again:
+	/* Iterating a htable during deletes is safe, but might skip entries. */
+	needs_rerun = false;
+	for (w = txwatch_hash_first(&dstate->txwatches, &i);
+	     w;
+	     w = txwatch_hash_next(&dstate->txwatches, &i)) {
+		struct sha256_double blkid;
+		size_t depth;
 
-	/* Are we watching this txid directly (or already reported)? */
-	txw = txwatch_hash_get(&dstate->txwatches, txid);
-	if (txw) {
-		if (txw->cb && confirmations != txw->depth) {
-			txw->depth = confirmations;
-			txw->cb(txw->peer, txw->depth, blkhash, txid,
-				txw->cbdata);
+		/* Don't fire if we haven't seen it at all. */
+		if (w->depth == -1)
+			continue;
+
+		depth = get_tx_depth(dstate, w, &blkid);
+		if (depth != w->depth) {
+			w->depth = depth;
+			w->cb(w->peer, w->depth, &blkid, &w->txid, w->cbdata);
+			needs_rerun = true;
 		}
-		return;
 	}
-
-	txinfo = tal(dstate, struct tx_info);
-	txinfo->conf = confirmations;
-	if (blkhash)
-		txinfo->blkhash = *blkhash;
-	/* FIXME: Since we don't use segwit, we need to normalize txids. */
-	bitcoind_txid_lookup(dstate, txid, watched_normalized_txid, txinfo);
-}
-
-static struct timeout watch_timeout;
-
-static void start_poll_transactions(struct lightningd_state *dstate)
-{
-	if (!list_empty(&dstate->bitcoin_req)) {
-		log_unusual(dstate->base_log,
-			    "Delaying start poll: commands in progress");
-	} else
-		bitcoind_poll_transactions(dstate, watched_txid);
-	refresh_timeout(dstate, &watch_timeout);
-}
-
-void setup_watch_timer(struct lightningd_state *dstate)
-{
-	init_timeout(&watch_timeout, dstate->config.poll_seconds,
-		     start_poll_transactions, dstate);
-	/* Run once immediately, in case there are issues. */
-	start_poll_transactions(dstate);
+	if (needs_rerun)
+		goto again;
 }
diff --git a/daemon/watch.h b/daemon/watch.h
index dbd829467..6a636c128 100644
--- a/daemon/watch.h
+++ b/daemon/watch.h
@@ -119,10 +119,17 @@ struct txowatch *watch_txo_(const tal_t *ctx,
 				      const struct bitcoin_tx *),	\
 		  (cbdata))
 
-void peer_watch_setup(struct peer *peer);
-
 /* FIXME: Seg witness removes need for this! */
 void normalized_txid(const struct bitcoin_tx *tx, struct sha256_double *txid);
 
-void setup_watch_timer(struct lightningd_state *dstate);
+void txwatch_fire(struct lightningd_state *dstate,
+		  struct txwatch *txw,
+		  unsigned int depth,
+		  const struct sha256_double *blkhash);
+
+void txowatch_fire(struct lightningd_state *dstate,
+		   const struct txowatch *txow,
+		   const struct bitcoin_tx *tx);
+
+void watch_topology_changed(struct lightningd_state *dstate);
 #endif /* LIGHTNING_DAEMON_WATCH_H */