Purpose of the Lightning Network Channel Backup
Based on my understanding the Channel Backup model exists between two users fostering lightning-fast Bitcoin transactions. It ensures that a user doesn't lose his/her share of Bitcoin locked inside a channel if something mistakenly happens to the Lighting Network node.
The channel information is static and it includes;
- The channel's funding transaction
- Channel capacity
- Public key of the other node in the channel
- Other relevant channel configuration details
How to use it
1. Restore Wallet Seed: Restore your 24-word wallet seed phrase. This recreates your on-chain Bitcoin wallet.
2. Node Failure: Your Lightning Network node experiences a major problem (e.g., corrupted hard drive, software failure).
3. New Node Setup: You install a fresh Lightning Network node.
4. Restore SCB: Transfer the SCB file to your new node or re-enter individual SCBs. Different wallets and LN tools provide the recover option in different places. In Thunderhub for example you can find it under Tools / Backups / Recover Funds from Channels / Recover.
5. DLP Process:
- Your new node uses the SCB file(s) to discover the public keys of nodes you had channels with.
- Your node contacts your former channel partners, alerting them to your issue.
- Cooperative nodes will initiate force-closing the channels, returning your on-chain balance according to the last agreed-upon state in the backup.
Original source Link - https://lightningnetwork.plus/posts/531