# BOLT #2: Peer Protocol for Channel Management
The peer channel protocol has three phases: establishment, normal
operation, and closing.
The messages described in this document are grouped logically into 4 groups by their most significant set bit:
- Setup & signalling (types `0`-`31`): comprises setup of the cryptographic transport, communication of supported features and error reporting. These are described in BOLT #1.
- Channel (types `32`-`127`): comprises messages used to setup, update and tear down micropayment channels
- HTLC (types `128`-`255`: comprises messages related to adding, revoking and settling HTLCs on a micropayment channel
- Routing (types `256`-`511`): node and channel announcements, as well as any active route exploration.
# Table of Contents
FIXME
# Channel
## Channel Establishment
Channel establishment begins immediately after authentication, and
consists of each node sending an `open_channel` message, followed by
one node sending `open_funding`, the other providing its
`open_commit_sig` then both sides waiting for the funding transaction
to enter the blockchain and reach their specified depth, at which
point they send `open_complete`. After both sides have sent
`open_complete` the channel is established and can begin normal
operation.
+-------+ +-------+
| |--(1)--- open_channel ----->| |
| |<-(2)-- accept_channel -----| |
| | | |
| A |--(3)-- funding_created --->| B |
| |<-(4)-- funding_signed -----| |
| | | |
| |--(5)--- funding_locked ---->| |
| |<-(6)--- funding_locked -----| |
+-------+ +-------+
If this fails at any stage, or a node decides that the channel terms
offered by the other node are not suitable, the channel establishment
fails.
## The `open_channel` message
This message contains information about a node, and indicates its
desire to set up a new channel.
1. type: 32 (`MSG_OPEN_CHANNEL`)
2. data:
* [8:temporary-channel-id]
* [8:funding-satoshis]
* [8:push-msat]
* [8:dust-limit-satoshis]
* [8:max-htlc-value-in-flight-msat]
* [8:channel-reserve-satoshis]
* [4:htlc-minimum-msat]
* [4:max-num-htlcs]
* [4:feerate-per-kb]
* [2:to-self-delay]
* [33:funding-pubkey]
* [33:revocation-basepoint]
* [33:payment-basepoint]
* [33:delayed-payment-basepoint]
The `temporary-channel-id` is used to identify this channel until the funding transaction is established. `funding-satoshis` is the amount the sender is putting into the channel. `dust-limit-satoshis` is the threshold below which no HTLC output should be generated for this node’s commitment transaction; ie. HTLCs below this amount are not enforceable onchain. This reflects the reality that tiny outputs are not considered standard transactions and will not propagate through the bitcoin network.
`max-htlc-value-in-inflight-msat` is a cap on total value of outstanding HTLCs, which allows a node to limit its exposure to HTLCs; similarly `max-num-htlcs` limits the number of outstanding HTLCs the other node can offer. `channel-reserve-satoshis` is the minimum amount that the other node is to keep as a direct payment. `htlc-minimum-msat` indicates the smallest value HTLC this node wil accept. `feerate-per-kb` indicates the initial fee rate which this side will pay for commitment and HTLC transactions (this can be adjusted later with a `update_fee` message). `to-self-delay` is the number of block that the other nodes to-self outputs must be delayed, using `OP_CHECKSEQUENCEVERIFY` delays; this is how long it will have to wait in case of breakdown before redeeming its own funds.
The `funding-pubkey` is the public key in the 2-of-2 multisig script of the funding transaction output. The `revocation-basepoint` is combined with the revocation preimage for this commitment transaction to generate a unique revocation key for this commitment transaction. The `payment-basepoint` and `delayed-payment-basepoint` are similarly used to generate a series of keys for any payments to this node: `delayed-payment-basepoint` is used to for payments encumbered by a delau. Varying these keys ensures that the transaction ID of each commitment transaction is unpredictable by an external observer, even if one commitment transaction is seen: this property is very useful for preserving privacy when outsourcing penalty transactions to third parties.
FIXME: Describe Dangerous feature bit for larger channel amounts.
### Requirements
A sending node MUST set the most significant bit in
`temporary-channel-id`, and MUST ensure it is unique from any other
channel id with the same peer. The sender MUST set `funding-satoshis`
to less than 2^24 satoshi. The sender MUST set `push-msat` to
equal or less than to 1000 * `funding-satoshis`. The sender SHOULD set `dust-limit-satoshis` large enough to ensure it can propagate the resulting transaction to miners.
The sender SHOULD set `to-self-delay` sufficient to ensure the sender
can irreversibly spend a commitment transaction output in case of
misbehavior by the receiver. The sender SHOULD set `minimum-depth` to
an amount where the sender considers reorganizations to be low risk.
`funding-pubkey`, `revocation-basepoint`, `payment-basepoint` and `delayed-payment-basepoint` MUST be valid DER-encoded
compressed secp256k1 pubkeys. The sender SHOULD set `feerate-per-kb`
to at least the rate it estimates would cause the transaction to be
immediately included in a block.
The sender SHOULD set `dust-limit-satoshis` to sufficient value to
allow commitment transactions to propagate through the bitcoin
network. It MUST set `max-num-htlcs` to less than or equal to 600
[BOLT #5](05-onchain.md#penalty-transaction-weight-calculation).
It SHOULD set `htlc-minimum-msat` to the minimum
amount HTLC it is willing to accept from this peer.
The receiving node MUST fail the channel if `to-self-delay` is
unreasonably large. The receiver MAY fail the channel if
`funding-satoshis` is too small, and MUST fail the channel if
`push-msat` is greater than `funding-amount` * 1000.
The receiving node MAY fail the channel if it considers
`htlc-minimum-msat` too large, `max-htlc-value-in-flight` too small, `channel-reserve-satoshis` too large, or `max-num-htlcs` too small. It MUST fail the channel if `max-num-htlcs` is greater than 600.
The receiver MUST fail the channel if
considers `feerate-per-kb` too small for timely processing. The
receiver MUST fail the channel if `funding-pubkey`, `revocation-basepoint`, `payment-basepoint` or `delayed-payment-basepoint`
are not be valid DER-encoded compressed secp256k1 pubkeys.
The receiver MUST NOT consider funds received using `push-msat` to be received until the funding transaction has reached sufficient depth.
### Rationale
The *channel reserve* is specified by the peer's `channel-reserve-satoshis`; 1% of the channel total is suggested. Each side of a channel maintains this reserve so it always has something to lose if it were to try to broadcast an old, revoked commitment transaction. Initially this reserve may not be met, as only one side has funds, but the protocol ensures that progress is always toward it being met, and once met it is maintained.
The sender can unconditionally give initial funds to the receiver using a non-zero `push-msat`, and this is one case where the normal reserve mechanism doesn't apply. However, like any other on-chain transaction, this payment is not certain until the funding transaction has been confirmed sufficiently (may be double-spent) and may require a separate method to prove payment via on-chain confirmation.
### Future
It would be easy to have a local feature bit which indicated that a
receiving was prepared to fund a channel, which would reverse this
protocol.
## The `accept_channel` message
This message contains information about a node, and indicates its
acceptance of the new channel.
1. type: 33 (`MSG_ACCEPT_CHANNEL`)
2. data:
* [8:temporary-channel-id]
* [8:dust-limit-satoshis]
* [8:max-htlc-value-in-flight-msat]
* [8:channel-reserve-satoshis]
* [4:minimum-depth]
* [4:htlc-minimum-msat]
* [4:max-num-htlcs]
* [2:to-self-delay]
* [33:funding-pubkey]
* [33:revocation-basepoint]
* [33:payment-basepoint]
* [33:delayed-payment-basepoint]
* [33:first-per-commitment-point]
### Requirements
The `temporary-channel-id` MUST be the same as the `temporary-channel-id` in the `open_channel` message. The sender SHOULD set `minimum-depth` to a number of blocks it considers reasonable to avoid double-spending of the funding transaction.
The receiver MAY reject the `minimum-depth` if it considers it unreasonably large.
Other fields have the same requirements as their counterparts in `open_channel`.
## The `funding_created` message
This message describes the outpoint which the funder has created for
the initial commitment transactions. After receiving the peer's
signature, it will broadcast the funding transaction.
1. type: 34 (`MSG_FUNDING_CREATED`)
2. data:
* [8:temporary-channel-id]
* [32:txid]
* [2:output_index]
* [64:signature]
FIXME: describe
### Requirements
The recipient MUST fail the channel if the signature is invalid.
## The `funding_signed` message
This message gives the funder the signature they need for the first
commitment transaction, so they can broadcast it knowing they can
redeem their funds if they need to.
1. type: 35 (`MSG_FUNDING_SIGNED`)
2. data:
* [8:temporary-channel-id]
* [64:signature]
### Requirements
FIXME: Describe
## The `funding_locked` message
This message indicates that the funding transaction has reached the `minimum-depth` asked for in `accept_channel`. Once both nodes have sent this, the channel enters normal operating mode.
1. type: 36 (`MSG_FUNDING_LOCKED`)
2. data:
* [8:temporary-channel-id]
* [8:channel-id]
* [33:next-per-commitment-point]
The `channel-id` is the unique description of the funding transaction.
It is constructed with the most significant 3 bytes as the block
height, the next 3 bytes indicating the transaction index within the
block, and the least significant two bytes indicating the output
index which pays to the channel.
This `channel-id` is used in all messages referring to the channel
from this point onwards.
### Requirements
FIXME: Describe
### Future
We could add an SPV proof, and route block hashes in separate
messages.
## Updating Fees: `update_fee`
An `update_fee` message is sent by the node which is paying the
bitcoin fee. Like any update, it is first committed to the receiver's
commitment transaction, then (once acknowledged) committed to the
sender's. Unlike an HTLC, `update_fee` is never closed, simply
replaced.
There is a possibility of a race: the recipient can add new HTLCs
before it receives the `update_fee`, and the sender may not be able to
afford the fee on its own commitment transaction once the `update_fee`
is acknowledged by the recipient. In this case, the fee will be less
than the fee rate.
The exact calculation used for deriving the fee from the fee rate is
given in [BOLT #3].
1. type: 37 (`MSG_UPDATE_FEE`)
2. data:
* [8:channel-id]
* [4:fee-per-kilobyte]
### Requirements
The node which is responsible for paying the bitcoin fee SHOULD send
`update_fee` when to ensure the current fee rate is sufficient for
timely processing of the commitment transaction by a significant
margin.
The node which is not responsible for paying the bitcoin fee MUST NOT
send `update_fee`.
A receiving node SHOULD fail the channel if the `update_fee` is too
low for timely processing.
A receiving node MUST fail the channel if the sender is not
responsible for paying the bitcoin fee.
A receiving node SHOULD fail the channel if the sender cannot afford
the new fee rate on the receiving node's current commitment
transaction, but it MAY delay this check until the `update_fee` is
committed.
### Rationale
Bitcoin fees are required for unilateral closes to be effective,
particularly since there is no general method for the node which
broadcasts it to use child-pays-for-parent to increase its effective
fee.
Given the variance in fees, and the fact that the transaction may be
spent in the future, it's a good idea for the fee payer to keep a good
margin, say 5x the expected fee requirement, but differing methods of
fee estimation mean we don't specify an exact value.
Since the fees are currently one-sided (the party which requested the
channel creation always pays the fees), it is simplest to only allow
them to set fee levels.
## Channel Close
Nodes can negotiate a mutual close for the connection, which unlike a
unilateral close, allows them to access their funds immediately and
can be negotiated with lower fees.
Closing happens in two stages: the first is by one side indicating
that it wants to clear the channel (and thus will accept no new
HTLCs), and once all HTLCs are resolved, the final channel close
negotiation begins.
+-------+ +-------+
| |--(1)----- shutdown ------->| |
| |<-(2)----- shutdown --------| |
| | | |
| | | |
| A | ... | B |
| | | |
| |<-(3)-- close_signature F1----| |
| |--(4)-- close_signature F2--->| |
| | ... | |
| |--(?)-- close_signature Fn--->| |
| |<-(?)-- close_signature Fn----| |
+-------+ +-------+
## Closing initiation: `shutdown`
Either node (or both) can send a `shutdown` message to initiate closing,
and indicating the scriptpubkey it wants to be paid to.
1. type: 38 (`MSG_SHUTDOWN`)
2. data:
* [8:channel-id]
* [4:len]
* [len:scriptpubkey]
### Requirements
A node MUST NOT send a `shutdown` if there are updates pending
on the receiving node's commitment transaction which are not yet added to the sender’s commitment.
A node MUST NOT send an `update_add_htlc` after a `shutdown`,
and MUST NOT send more than one `shutdown`. A sending node
SHOULD fail to route any HTLC added after it sent `shutdown`.
A sending node MUST set `scriptpubkey` to one of the following forms:
1. `OP_DUP` `OP_HASH160` `20` 20-bytes `OP_EQUALVERIFY` `OP_CHECKSIG`
(pay to pubkey hash), OR
2. `OP_HASH160` `20` 20-bytes `OP_EQUAL` (pay to script hash), OR
3. `OP_0` `20` 20-bytes (version 0 pay to witness pubkey), OR
4. `OP_0` `32` 32-bytes (version 0 pay to witness script hash)
A receiving node SHOULD fail the connection if the `scriptpubkey` is not one
of those forms.
A receiving node MUST reply to a `shutdown` message with a `shutdown` once there are no outstanding updates on the peer, unless it has already sent a `shutdown`.
### Rationale
If channel state is always "clean" (no pending changes) when a
shutdown starts, we avoid the question of how to behave if it wasn't;
the sender an always send an `update_commit` first.
As shutdown implies a desire to terminate, it implies that no new
HTLCs will be added or accepted.
The `scriptpubkey` forms include only standard forms accepted by the
bitcoin network, ensuring that the resulting transaction will
propagate to miners.
The `shutdown` response requirement implies that the node sends `update_commit` to commit any outstanding changes before replying, but it could theoretically reconnect instead, which simply erases all outstanding uncommitted changes.
## Closing negotiation: `close_signature`
Once shutdown is complete and the channel is empty of HTLCs, the final
current commitment transactions will have no HTLCs, and closing fee
negotiation begins. Each node chooses a fee it thinks is fair, and
signs the close transaction with the `script_pubkey` fields from the
`shutdown` messages and that fee, and sends the signature. The
process terminates when both agree on the same fee, or one side fails
the channel.
1. type: 39 (`MSG_CLOSE_SIGNATURE`)
2. data:
* [8:channel-id]
* [8:fee-satoshis]
* [64:signature]
### Requirements
Nodes SHOULD send a `close_signature` message after `shutdown` has
been received and no HTLCs remain in either commitment transaction.
A sending node MUST set `fee-satoshis` lower than or equal to the
fee of the final commitment transaction.
The sender SHOULD set the initial `fee-satoshis` according to its
estimate of cost of inclusion in a block.
The sender MUST set `signature` to the bitcoin signature of the close
transaction with the node responsible for paying the bitcoin fee
paying `fee-satoshis`, without populating any output which is below
the receiver's `dust-limit-satoshis`.
The receiver MUST check `signature` is valid for the close transaction
with the given `fee-satoshis` as detailed above, and MUST fail the
connection if it is not.
If the receiver agrees with the fee, it SHOULD reply with a
`close_signature` with the same `fee-satoshis` value, otherwise it
SHOULD propose a value strictly between the received `fee-satoshis`
and its previously-sent `fee-satoshis`.
Once a node has sent or received a `close_signature` with matching
`fee-satoshis` it SHOULD close the connection and SHOULD sign and
broadcast the final closing transaction.
### Rationale
Note that there is limited risk if the closing transaction is
delayed, and it will be broadcast very soon, so there is usually no
reason to pay a premium for rapid processing.
## Normal Operation
Once both nodes have exchanged `funding_locked`, the channel can be
used to make payments via Hash TimeLocked Contracts.
Changes are sent in batches: one or more `update` messages are sent before a
`commit_sig` message, as in the following diagram:
+-------+ +-------+
| |--(1)---- add_htlc ------>| |
| |--(2)---- add_htlc ------>| |
| |<-(3)---- add_htlc -------| |
| | | |
| |--(4)---- commit ------>| |
| A | | B |
| |<-(5)---- revocation -------| |
| |<-(6)---- commit -------| |
| | | |
| |--(7)---- revocation ------>| |
+-------+ +-------+
Counterintuitively, these updates apply to the *other node's*
commitment transaction; the node only adds those updates to its own
commitment transaction when the remote node acknowledges it has
applied them.
Thus each update traverses through the following states:
1. Pending on the receiver
2. In the receiver's latest commitment transaction,
3. ... and the receiver's previous commitment transaction has been revoked,
and the HTLC is pending on the sender.
4. ... and in the sender's latest commitment transaction
5. ... and the sender's previous commitment transaction has been revoked
As the two nodes updates are independent, the two commitment
transactions may be out of sync indefinitely. This is not concerning:
what matters is whether both sides have irrevocably committed to a
particular HTLC or not (the final state, above).
## Risks With HTLC Timeouts
HTLCs tend to be chained across the network. For example, a node A
might offer node B an HTLC with a timeout of 3 days, and node B might
offer node C the same HTLC with a timeout of 2 days.
This difference in timeouts is important: after 2 days B can try to
remove the offer to C even if C is unresponsive, by broadcasting the
commitment transaction it has with C and spending the HTLC output.
Even though C might race to try to use its payment preimage at that point to
also spend the HTLC, it should be resolved well before the 3 day
deadline so B can either redeem the HTLC off A or close it.
If the timing is too close, there is a risk of "one-sided redemption",
where the payment preimage received from an offered HTLC is too late
to be used for an incoming HTLC, leaving the node with unexpected
liability.
Thus the effective timeout of the HTLC is the `expiry`, plus some
additional delay for the transaction which redeems the HTLC output to
be irreversibly committed to the blockchain.
Thus a node MUST estimate the deadline for successful redemption for
each HTLC it offers. A node MUST NOT offer a HTLC after this
deadline, and MUST fail the channel if an HTLC which it offered is in
either node's current commitment transaction past this deadline.
## Adding an HTLC
Either node can send `update_add_htlc` to offer a HTLC to the other,
which is redeemable in return for a payment preimage. Amounts are in
millisatoshi, though on-chain enforcement is only possible for whole
satoshi amounts greater than the dust limit: in commitment transactions these are rounded down as
specified in [BOLT #3].
The format of the `route` portion, which indicates where the payment
is destined, is described in [BOLT #4].
1. type: 128 (`MSG_UPDATE_ADD_HTLC`)
2. data:
* [8:channel-id]
* [8:id]
* [4:amount-msat]
* [4:expiry]
* [32:payment-hash]
* [1254:onion-routing-packet]
### Requirements
A sending node MUST NOT offer `amount-msat` it cannot pay for in the
remote commitment transaction at the current `fee-rate` (see "Updating
Fees") while maintaining its channel reserve, and MUST offer
`amount-msat` greater than 0, and MUST NOT offer `amount-msat` below
the receiving node's `htlc-minimum-msat`.
A sending node MUST NOT add an HTLC if it would result in it offering
more than the remote's `max-num-htlcs` HTLCs in the remote commitment
transaction.
A sending node MUST set `id` to 0 for the first HTLC it offers, and
increase the value by 1 for each successive offer.
A receiving node SHOULD fail the channel if it receives an
`amount-sat` equal to zero, below its own `htlc-minimum-msat`, or
which the sending node cannot afford at the current `fee-rate` while
maintaining its channel reserve. A receiving node SHOULD fail the
channel if a sending node adds more than its `max-num-htlcs` HTLCs to
its local commitment transaction.
A receiving node MUST allow multiple HTLCs with the same payment hash.
A receiving node MUST ignore a repeated `id` value after a
reconnection if it has the sender did not previously acknowledge the
commitment of that HTLC. A receiving node MAY fail the channel if
other `id` violations occur.
### Rationale
Invalid amounts are a clear protocol violation and indicate a
breakdown.
If a node did not accept multiple HTLCs with the same payment hash, an
attacker could probe to see if a node had an existing HTLC. This
requirement deal with duplicates leads us to using a separate
identifier; we assume a 64 bit counter never wraps.
Retransmissions of unacknowledged updates are explicitly allowed for
reconnection purposes; allowing them at other times simplifies the
recipient code, though strict checking may help debugging.
## Removing an HTLC: `update_fulfill_htlc` and `update_fail_htlc`
For simplicity, a node can only remove HTLCs added by the other node.
There are three reasons for removing an HTLC: it has timed out, it has
failed to route, or the payment preimage is supplied.
The `reason` field is an opaque encrypted blob for the benefit of the
original HTLC initiator as defined in [BOLT #4].
1. type: 130 (`MSG_UPDATE_FULFILL_HTLC`)
2. data:
* [8:channel-id]
* [8:id]
* [32:payment-preimage]
For a timed out or route-failed HTLC:
1. type: 131 (`MSG_UPDATE_FAIL_HTLC`)
2. data:
* [8:channel-id]
* [8:id]
* [154:reason]
### Requirements
A node SHOULD remove an HTLC as soon as it can; in particular, a node
SHOULD fail an HTLC which has timed out.
A receiving node MUST check that `id` corresponds to an HTLC in its
current commitment transaction, and MUST fail the channel if it does
not.
A receiving node MUST check that the `payment-preimage` value in
`update-fulfill_htlc` SHA256 hashes to the corresponding HTLC
`payment-hash`, and MUST fail the channel if it does not.
A receiving node which closes an incoming HTLC in response to an
`update-fail-htlc` message on an offered HTLC MUST copy the `reason`
field to the outgoing `update-fail-htlc`.
### Rationale
A node which doesn't time out HTLCs it risks channel failure (see
"Risks With HTLC Timeouts").
## Committing Updates So Far: `commitsig`
When a node has changes for the remote commitment, it can apply them,
sign the resulting transaction as defined in [BOLT #3] and send a
`commitsig` message.
1. type: 132 (`MSG_COMMIT_SIG`)
2. data:
* [8:channel-id]
* [64:signature]
* [4:num-htlcs]
* [num-htlcs*64:htlc-signature]
## Requirements
A node MUST NOT send a `commitsig` message which does not include any
updates. Note that a node MAY send a `commitsig` message which only
alters the fee, and MAY send a `commitsig` message which doesn't
change the commitment transaction other than the new revocation hash
(due to dust, identical HTLC replacement, or insignificant or multiple
fee changes). A node MUST include one `htlc-signature` for every HTLC transaction corresponding to BIP69 lexicographic ordering of the commitment transaction.
A receiving node MUST fail the channel if `signature` is not valid for
its local commitment transaction once all pending updates are applied. A receiving node MUST fail the channel if `num-htlcs` is not exactly the number of HTLC outputs in the local commitment transaction once all pending updates are applied. A receiving node MUST fail the channel if any `htlc-signature` is not valid for the corresponding HTLC transaction.
A receiving node MUST respond with a `revocation` message.
## Rationale
There's little point offering spam updates; it implies a bug.
The `num-htlcs` field is redundant, but makes the packet length check fully self-contained.
## Completing the transition to the updated state: `revocation`
Once the recipient of `commitsig` checks the signature, it knows that
it has a valid new commitment transaction, replies with the commitment
preimage for the previous commitment transaction in a `revocation`
message.
This message also implicitly serves as an acknowledgement of receipt
of the `commitsig`, so it's a logical time for the `commitsig` sender
to apply to its own commitment, any pending updates it sent before
that `commitsig`.
This message also supplies the signatures for the sender's HTLC-timeout transactions. See [BOLT #5](05-onchain.md) for how this is used with a penalty transaction.
The description of key derivation is in [BOLT #3](03-transactions.md#key-derivation).
1. type: 133 (`MSG_REVOCATION`)
2. data:
* [8:channel-id]
* [32:per-commitment-secret]
* [33:next-per-commitment-point]
* [3:padding]
* [4:num-htlc-timeouts]
* [num-htlc-timeouts*64:htlc-timeout-signature]
### Requirements
A sending node MUST set `per-commitment-secret` to the secret used to generate keys for the
previous commitment transaction, MUST set `next-per-commitment-point` to the values for its next commitment transaction, and MUST set `padding` to all zeroes.
A receiving node MUST check that `per-commitment-secret` generates the previous `per-commitment-point`, and MUST fail if it does not. A receiving node MUST ignore the value of `padding`. A receiving node MAY fail if the `per-commitment-secret` was not generated by the protocol in [BOLT #3](03-transactions.md#per-commitment-secret-requirements).
A receiving node MUST fail the channel if any htlc-timeout-signature is not valid, or if num-htlc-timeout is not equal to the number of outputs in the sending node's commitment transaction corresponding to HTLCs offered be the sending node.
Nodes MUST NOT broadcast old (revoked) commitment transactions; doing
so will allow the other node to seize all the funds. Nodes SHOULD NOT
sign commitment transactions unless it is about to broadcast them (due
to a failed connection), to reduce this risk.
# Authors
FIXME