lnd/docs/configuring_tor.md

Table of Contents

1. Overview
2. Getting Started
3. Tor Stream Isolation
4. Authentication
5. Listening for Inbound Connections

Overview

lnd currently has complete support for using Lightning over Tor. Usage of Lightning over Tor is valuable as routing nodes no longer need to potentially expose their location via their advertised IP address. Additionally, leaf nodes can also protect their location by using Tor for anonymous networking to establish connections.

With widespread usage of Onion Services within the network, concerns about the difficulty of proper NAT traversal are alleviated, as usage of onion services allows nodes to accept inbound connections even if they're behind a NAT. At the time of writing this documentation, lnd supports both types of onion services: v2 and v3.

Before following the remainder of this documentation, you should ensure that you already have Tor installed locally. If you want to run v3 Onion Services, make sure that you run at least version 0.3.3.6. Official instructions to install the latest release of Tor can be found here.

NOTE: This documentation covers how to ensure that lnd's Lightning protocol traffic is tunneled over Tor. Users must ensure that when also running a Bitcoin full-node, that it is also proxying all traffic over Tor. If using the neutrino backend for lnd, then it will automatically also default to Tor usage if active within lnd.

Getting Started

First, you'll want to run tor locally before starting up lnd. Depending on how you installed Tor, you'll find the configuration file at /usr/local/etc/tor/torrc. Here's an example configuration file that we'll be using for the remainder of the tutorial:

SOCKSPort 9050
Log notice stdout
ControlPort 9051
CookieAuthentication 1

With the configuration file created, you'll then want to start the Tor daemon:

$  tor
Feb 05 17:02:06.501 [notice] Tor 0.3.1.8 (git-ad5027f7dc790624) running on Darwin with Libevent 2.1.8-stable, OpenSSL 1.0.2l, Zlib 1.2.8, Liblzma N/A, and Libzstd N/A.
Feb 05 17:02:06.502 [notice] Tor can't help you if you use it wrong! Learn how to be safe at https://www.torproject.org/download/download#warning
Feb 05 17:02:06.502 [notice] Read configuration file "/usr/local/etc/tor/torrc".
Feb 05 17:02:06.506 [notice] Opening Socks listener on 127.0.0.1:9050
Feb 05 17:02:06.506 [notice] Opening Control listener on 127.0.0.1:9051

Once the tor daemon has started and it has finished bootstrapping, you'll see this in the logs:

Feb 05 17:02:06.000 [notice] Bootstrapped 0%: Starting
Feb 05 17:02:07.000 [notice] Starting with guard context "default"
Feb 05 17:02:07.000 [notice] Bootstrapped 80%: Connecting to the Tor network
Feb 05 17:02:07.000 [notice] Bootstrapped 85%: Finishing handshake with first hop
Feb 05 17:02:08.000 [notice] Bootstrapped 90%: Establishing a Tor circuit
Feb 05 17:02:11.000 [notice] Tor has successfully opened a circuit. Looks like client functionality is working.
Feb 05 17:02:11.000 [notice] Bootstrapped 100%: Done

This indicates the daemon is fully bootstrapped and ready to proxy connections. At this point, we can now start lnd with the relevant arguments:

$  ./lnd -h

<snip>

Tor:
      --tor.active                                            Allow outbound and inbound connections to be routed through Tor
      --tor.socks=                                            The host:port that Tor's exposed SOCKS5 proxy is listening on (default: localhost:9050)
      --tor.dns=                                              The DNS server as host:port that Tor will use for SRV queries - NOTE must have TCP resolution enabled (default: soa.nodes.lightning.directory:53)
      --tor.streamisolation                                   Enable Tor stream isolation by randomizing user credentials for each connection.
      --tor.control=                                          The host:port that Tor is listening on for Tor control connections (default: localhost:9051)
      --tor.targetipaddress=                                  IP address that Tor should use as the target of the hidden service
      --tor.password=                                         The password used to arrive at the HashedControlPassword for the control port. If provided, the HASHEDPASSWORD authentication method will be used instead of the SAFECOOKIE one.
      --tor.v2                                                Automatically set up a v2 onion service to listen for inbound connections
      --tor.v3                                                Automatically set up a v3 onion service to listen for inbound connections
      --tor.privatekeypath=                                   The path to the private key of the onion service being created

There are a couple things here, so let's dissect them. The --tor.active flag allows lnd to route all outbound and inbound connections through Tor.

Outbound connections are possible with the use of the --tor.socks and --tor.dns arguments. The --tor.socks argument should point to the interface that the Tor daemon is listening on to proxy connections. The --tor.dns flag is required in order to be able to properly automatically bootstrap a set of peer connections. The tor daemon doesn't currently support proxying SRV queries over Tor. So instead, we need to connect directly to the authoritative DNS server over TCP, in order query for SRV records that we can use to bootstrap our connections.

Inbound connections are possible due to lnd automatically creating an onion service. A path to save the onion service's private key can be specified with the --tor.privatekeypath flag.

Most of these arguments have defaults, so as long as they apply to you, routing all outbound and inbound connections through Tor can simply be done with either v2 or v3 onion services:

$  ./lnd --tor.active --tor.v2

$  ./lnd --tor.active --tor.v3

See Listening for Inbound Connections for more info about allowing inbound connections via Tor.

Outbound support only can also be used with:

$  ./lnd --tor.active

This will allow you to make all outgoing connections over Tor. Listening is disabled to prevent inadvertent leaks.

Tor Stream Isolation

Our support for Tor also has an additional privacy enhancing modified: stream isolation. Usage of this mode means that Tor will always use new circuit for each connection. This added features means that it's harder to correlate connections. As otherwise, several applications using Tor might share the same circuit.

Activating stream isolation is very straightforward, we only require the specification of an additional argument:

$  ./lnd --tor.active --tor.streamisolation

Authentication

In order for lnd to communicate with the Tor daemon securely, it must first establish an authenticated connection. lnd supports the following Tor control authentication methods (arguably, from most to least secure):

• SAFECOOKIE: This authentication method relies on a cookie created and stored by the Tor daemon and is the default assuming the Tor daemon supports it by specifying CookieAuthentication 1 in its configuration file.
• HASHEDPASSWORD: This authentication method is stateless as it relies on a password hash scheme and may be useful if the Tor daemon is operating under a separate host from the lnd node. The password hash can be obtained through the Tor daemon with tor --hash-password PASSWORD, which should then be specified in Tor's configuration file with HashedControlPassword PASSWORD_HASH. Finally, to use it within lnd, the --tor.password flag should be provided with the corresponding password.
• NULL: To bypass any authentication at all, this scheme can be used instead. It doesn't require any additional flags to lnd or configuration options to the Tor daemon.

Listening for Inbound Connections

In order to listen for inbound connections through Tor, an onion service must be created. There are two types of onion services: v2 and v3. v3 onion services are the latest generation of onion services and they provide a number of advantages over the legacy v2 onion services. To learn more about these benefits, see Intro to Next Gen Onion Services.

Both types can be created and used automatically by lnd. Specifying which type should be used can easily be done by either using the tor.v2 or tor.v3 flag. To prevent unintentional leaking of identifying information, it is also necessary to add the flag listen=localhost.

For example, v3 onion services can be used with the following flags:

$  ./lnd --tor.active --tor.v3 --listen=localhost

This will automatically create a hidden service for your node to use to listen for inbound connections and advertise itself to the network. The onion service's private key is saved to a file named v2_onion_private_key or v3_onion_private_key depending on the type of onion service used in lnd's base directory. This will allow lnd to recreate the same hidden service upon restart. If you wish to generate a new onion service, you can simply delete this file. The path to this private key file can also be modified with the --tor.privatekeypath argument.

You can optionally encrypt the Tor private key by using the --tor.encryptkey flag. This will still write to the same private key files. However instead of writing the plaintext private key, lnd encrypts the private key using the wallet's seed and writes the encrypted blob to the file.