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When opening a lightning network channel between two parties, which of the following is true:

1) They must both pay a fee to open the channel

2) They might both pay a fee to open the channel

3) Just one party pays a fee.

The fee here refers to the bitcoin mining fee, not to the amount of BTC the two parties are putting in the channel.

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Because a fee is part of a transaction, the fee must be paid by whichever party creates the funding transaction.

Don't think of it as paying a fee to open a channel, think of it as funding a channel with a transaction. The fee just happens to be part of the transaction. I believe the current spec has just a single party funding a transaction, but I see no reason why this could not be modified for parties to share the funding cost, in which case both would likely contribute to the fee.

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Well,

Opening a channel (and correct me if I am wrong), you assign the satoshis in the channel point output of the funding transaction to three balances living on the channel by agreeing to them on a commit transactions between the parties:

  1. Your local balance
  2. Remote balance
  3. Reservation for a final commit fee

Essentially you create and share with your peer -but not broadcast to the Bitcoin network yet- a transaction that outputs:

  1. Your local balance to your Bitcoin address
  2. Remote balance to the peers Bitcoin address
  3. Leaves the commit fee for the miners

So, essentially when you open a Lightning channel you are:

  1. Paying a tx fee to open the channel
  2. Part of your funding is reserved for closing and never gets shows on your channel balance

The final commit fee is coming out of your pocket as the initiator of the channel.

So it could be said that opening a channel costs you two transaction fees. So you should make at least one payment on the channel before you break even (minus ln fees so you might need two essentially)

After that besides ln fees it's all gravy from there on with every payment you make.

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    Downvoted. Funding transaction involves sending some satoshis to a multi-sig address that is controlled by both channel parties. To-local/remote balance form the part of the commitment transaction not the funding transaction. – Ugam Kamat Aug 27 '19 at 16:38

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