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Currently, the funds deposited in a payment channel cannot be sent on-chain without closing the channel. Similarly, the user must open a brand new channel in order to deposit some on-chain funds into LN.

Is it possible to make a LN wallet seamless, so that the user could be freed from dealing with hassles like channel opening/closing?

2

No, that is not possible. The opening and closing of channels by confirming funding and closing transactions represents the act of securing and delivering of the channel capacity and balance respectively.

The 2-of-2 multi-sig from the funding channel represents the total channel capacity. During the lifetime of the channel, this multi-sig must remain unspent, so that the spending transaction which is eventually confirmed during channel close can be updated during the channel lifetime.

Since no coins can be created, the (funding) input cannot be more than the total of closing transactions outputs, whose amounts represent the last channel balance.

There are proposals to "spend" this funding output together with additional inputs/outputs to an updated funding output to update channel capacities. See channel "splicing" on this topic.

  • But even Splicing is not seamless... If however people decide to use custodial services they can be on boarded seamlessly. Also you could do a submarine swap changing from off to on chain. – Rene Pickhardt Jan 16 at 18:20
  • No, not seamless, that's true, just a way to update channel capacity without closing channel. – James C. Jan 16 at 18:31
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    Custodial services, in Bitcoin? ;) – James C. Jan 16 at 18:34
  • @RenePickhardt Why splicing is still not seamless? What does "without needing to halt all channel updates" mean exactly? github.com/lightningnetwork/lnd/issues/… Does it mean that the channel cannot be used to forward payments during the confirmation period? – Chris Chen Jan 16 at 19:32
  • The channel continues to operate while Splicing. Still there are on chain transactions involved. In that sense it is similarly not seamless as opening a channel – Rene Pickhardt Jan 17 at 8:34

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