Topic: Opinions on Phoenix Wallet? (Read 1402 times)

But because Phoenix is building an app that wants to give its users a good UX when using the Lightning Network, then they need to accept the opportunity-cost and boot-strap the the network with liquidity from their own wallet. They may currently not earn much today, but given the need for layered privacy and low fees for small transactions, it could help increase the demand for payment channels.

There is a difference if you are you talking about custodial or non-custodial LN wallets.
I know only one or two desktop wallets that supports Lightning Network, but developers are probably thinking that most people would more likely spend LN in coffee shops and similar places using their phones.

You're right, my reasoning was wrong. Most of the funds are locked on Phoenix' end of the channel, and they locked even more than I deposited. Makes me wonder how profitable this is for them: it looks like they're just HODLing their funds in open channels, but they can't earn much unless people send and receive many transactions.

Phoenix is also mobile-only.

I get that people are going to be tipping more with their phones, but why are the vast majority of lightning wallets either mobile apps or browser extensions?

Is there no incentive to make desktop applications for it like there is for Nostr?

Although having said that, most lightning wallets are centralized so I guess that doesn't really matter.

A closure of such channels may make sense for Phoenix. I guess, many Phoenix users have given up using their wallets with zero balance. And now Phoenix should have a lot of outbound liquidity in such channels. But Phoenix cannot use it, because other sides of all those channels are “leaves” of the LN, so they don’t route transfers. The further, the more Phoenix’ money are locked in such channels. There must be a moment when Phoenix cannot afford too lock as much money. At that moment, the channels will be closed.

It’s better for them to close those channels when onchain fees are not too high. But the more popular Bitcoin becomes, the more people want to make transactions. So, the probability of small fees are not very high in the future. Phoenix must decide soon, what to do with such channels.   

In Phoenix 2.X you always have only one channel open thanks to splicing.  It's a huge upgrade that I can't wait to come to other Lightning wallets.

seems to work now. i set the limit to 10k sats for the fees and it works as i imagined - last transaction with fee of 24 satoshis

Settings > Channel list.

If you don't have a channel yet, you'll need to open at least one.

how do you know or where can i see if a channel is opened/closed?


when i turn this option off, i get a message telling me that the next transaction will fail in any case

As far as I know: yes. See the fees page.
But, if you don't have enough receiving liquidity, Phoenix will have to open a new channel again.

Android on my old phone is too old to update Phoenix Wallet, and I don't want to install more wallets on my regular phone. That's why I disabled "Automatic on-the-fly channel creation to avoid high fees" (from Settings).

Wallet of Satoshi is custodial, so it doesn't open (on-chain) channels for you. Phoenix Wallet is non-custodial after opening the channel. That's the difference.
In my experience, custodial LN wallets work easier. Just don't trust them with with large amounts.

so do i understand correctly that these high fees are only charged for the first transaction that my Phoenix wallet receives and from the second transaction onwards everything is in cents (if my wallet is filled with satoshis)?
i tried the same thing with another wallet (wos) and it doesn't matter whether it's the first or fifth transaction - the fees were in the cent range...

See:
That's true. But on-chain you'll pay that for each transaction, and with LN only for the first transaction (as long as you have enough liquidity).
Or just use a custodial LN wallet (for small amounts), so you don't have any on-chain costs.

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I still have a few open channels in Phoenix Wallet (created years ago, when on-chain fees were much lower).
Those channels are almost empty, but have receiving liquidity. There's no point for Phoenix Wallet to close them, as it would only cost them transaction fees. I still have 2 seed phrases from different installations, and I think I have a total of 4 open channels.

Android on my old phone is too old to update Phoenix Wallet, and I don't want to install more wallets on my regular phone.

i didn't want to create a new thread for my problem and am now asking my question in this one
i installed the Phoenix wallet on my android mobile phone yesterday and wanted to receive the very first transaction.
but this is canceled due to the fees i set of max. 5000 sats - the message says that the fee is almost 20k sats and i could change that in my settings
what am i doing wrong or is that really the case? to be honest, i can't imagine it, otherwise i can immediately claim an on-chain transaction

I wouldn't like the scenario in which everyone relies on the same exchange. If there are (say) 20 large parties offering LN "wallets", 95% of my transactions would be to users who use a different exchange. It may be just a database entry at the exchange I'm using, but they'll need to make an actual LN-transaction to the other party every time I make the payment.
Kinda like BlueWallet does already.

In your situation, there are two transactions, 1) tx from you to ACINQ, and from ACINQ that opens the LN channel. This is at a minimum, two inputs and two outputs, plus additional bytes that are required for each transaction. Two parties sending coin to fund a LN channel in the same transaction would involve a single transaction, and a minimum of one output and two inputs. The net effect is that less block space would be used.

If you are buying a LN 'balance you are buying a database entry. If the exchange has many customers and merchants, there would be no reason to use LN, you could simply pay another exchange customer, and the database could be updated.

There's an update from Phoenix Wallet:
Mind the minimum fee:
This makes sense, it's obvious they were paying more for opening channels than they earned from it.

Depositing 0.01 BTC into Phoenix Wallet will now get you 0.0099 BTC in a LN channel. That's about $5.60 fee on a $560 channel. If you make many payments, it's still a lot cheaper than on-chain transactions.

I see now where my logic failed me. I overlooked your post from April 19 where you wrote that the on-chain transaction of 13 sat/vByte sent to your Phoenix Wallet was confirmed. After that, ACINQ opened the channel. I thought that the channel was opened before your transactions to Phoenix Wallet got confirmed. That's why I asked about the possibility to scam someone over the LN by double-spending the initial deposit to Phoenix Wallet before it confirms.

Now it's all clear, thanks!

The fee is 0.1%, with a 1000 sat minimum. I paid 1000 sat, ACINQ paid almost double that amount to open the channel.

More inputs means higher total transaction fees. I can imagine a future in which for LN users don't open their own channels at all: you just buy LN balance at an exchange, the exchange opens large channels, and you use their channels for buying coffee.
I know some people won't like that level of centralization, and I'm not a huge fan of it myself, but if that's what it takes to reach mass adoption, I can live with it. And if you really want, you can always pay the additional on-chain fees to connect your own node.

I saw estimates of exchanges holding a couple hundred billion dollars worth of crypto. Adding a few bucks for custodial coffee payments shouldn't be a problem.

If you are sending them coin in advance, you are giving them custody of your coin before they open a LN channel. This is true regardless of if they open a channel with a fee of 1 sat/vByte, or 10000 sat/vByte. I assume they are taking the fee out of your channel balance, so it will be beneficial for you to have the fee they pay on the funding transaction be lower.

I think in the future, it would be more common for channels to be funded via both parties sending coin in the same transaction.

All correct!

At first, I was very disappointed they opened a channel with such a low fee.
When I found out I could just use the channel, I was pleasantly surprised. Even though it's more or less custodial until the channel got confirmed, from a user's perspective it's very convenient.

On PhoenixWallet's Telegram channel, I read they disallowed opening channels for new users for a while. High on-chain fees don't really work with chain-related LN actions.

If I am understanding correctly, you sent coin to ACINQ, and upon this transaction confirming, they opened a LN channel with you that involves you having outbound capacity in the amount of the coin you sent (less any fees they are charging you), and possibly some inbound capacity for you.

If this is true, there is no risk to ACINQ because your "deposit" has already confirmed. Allowing a LN transaction to be processed when the opening transaction is unconfirmed is opening up risk to the counterparty to the channel only, and no one else in the LN network. This is probably a setting that should be set to "disable" by default though.

No. Changing the fee changes the transaction, which means it's a new channel and the current channel disappears.

ViaBTC's transaction accelerator is the only one I know of that works (minimum fee is 10 sat/byte (not vbyte)).

Your funding transaction needs to have a high enough fee to get confirmed before the channel is opened.

LoyceV, thanks for sharing your experience! I'm curious can that transaction be included in a future transaction with a fee high enough to get it confirmed quicker (if they were to ever "need" that)?

I've submitted transactions with fees that are too low and just sit there unconfirmed. I don't personally know how to bump those fees, but I feel like I've read or heard about that being an option.

I'm thinking these are two things that could be part of why you're able to use your Lightning Network channel and "they" aren't too worried about it.

Phoenix has been my lightning network wallet of choice due to low fee experience. The only issue with using the lightning network is when I have to load my wallet, but if I can lower the fees for loading my wallet and still be able to send payments to folks, that's even better.

While I understand it's theoretically possible to scam someone, I'm not sure how practical it is and how possible it would be for someone like me to even accomplish that, so I'm thinking more likely, as long as someone isn't in a hurry for the funds, they can let it sit there until perhaps they even pay a miner a boost to process that transaction in their next block. I would think that could be another way to accomplish this, but not sure whether services like that are actually set up at this point in time.

If ACINQ wanted to scam me, they would have done it by now.

Their LN-wallet isn't directly connected to my unconfirmed channel, they're connected to the ACINQ node (with possibly more nodes in between), and I'm pretty sure all those nodes won't accept a LN-transaction from a channel that isn't confirmed on-chain.

Do you feel like that opens the door for scams? Theoretically, you make a deal with someone where that person sends you cash or another crypto via an on-chain transaction, and you send him a payment via the LN where the on-chain fees are way too low. Do they mention in their documentation what are the minimum required fees, is there a minimum? Any mention how long the on-chain transaction will be broadcasted until it's finally dropped, if ever?

Maybe my logic is a bit of here. 

That's not how Phoenix Wallet works: I didn't open the channel, ACINQ did!

They'll just keep broadcasting it until it confirms.

Blockchair still knows the transaction, it's not confirmed, and I can just make outgoing payments

The fees you used to open the channel were quite low. Even two ago days when you made that transaction, 13 sat/vByte looks like a fee that would have below the purging limit. What if your opening transaction gets purged from the mempool? We are currently at a 18-19 sats purging threshold. Did your on-chain transaction confirm in the meantime? Are you able to use the channel for outgoing payments already?

Yep! I don't think there's risk in it for them though, they own the channel opening transaction.

True. But the risk is for the user: in a way the current channel is still custodial. I'll give them the benefit of the doubt though: it works just fine!

Not sure if I'm following this correctly, but are they pretty much shouldering an unconfirmed transaction(at least temporarily) and taking a small risk just for a better experience for the end user? If so, though I'm not sure what the risks are for the user, but they seem to be doing the 'lightning for beginners' aspect really really well.

ACINQ has been around for years. It's much more likely they try to grow and earn billions from an IPO in the future.
Update: I have an open channel! It was opened (with 13 sat/vbyte) a few hours after my deposit confirmed, and a couple hours later the channel and balance became available to me. Here's the interesting part: The on-chain transaction opening the channel isn't confirmed yet! As far as I know, that's not even possible
So, and I'm slightly speculating here, this would mean ACINQ accepts LN-funds coming out of a LN-channel that's not confirmed on-chain yet. Because they're the ones who opened the channel, they can be sure it's not going to be double spent at some point and will confirm eventually. And I also expect their own hub to have confirmed channels with third parties, so third parties aren't dealing with an unconfirmed channel. So far so good, I am quite happy I don't have to wait (weeks?) for this transaction to confirm. But I'm not sure if this means the channel is now more or less custodial: if I try to close the channel, the opening transaction still has to confirm.

Update (6 days later): the transaction that opened my LN channel got confirmed. All this time I've been using Phoenix Wallet without problems.

Feels like the project is about to close
Prob restore it somewhere else on send to a different one

This is new: after receiving an on-chain transaction on Phoenix Wallet, it shows a popup:
Clicking the link shows that "channel opening/closing can be slow to confirm."

Meanwhile, Phoenix doesn't show a channel being opened, it shortly showed a new channel as "closed", but that one disappeared. On-chain I can see my transaction is split up into several other transactions already, each with 12 sat/vbyte fee. This was the largest deposit I've sent into LN so far, and channel opening is custodial. I don't know if a channel was opened for me, but if it's with 12 sat/vbyte, it's going to take a while.
I'm slightly disappointed Phoenix wallet didn't show this when I created the deposit address, or just increased their fee for opening a channel.

BlueWallet is a custodial wallet, while Phoenix Wallet is not. Making a deposit to BlueWallet is sending coin to a service that is crediting your account while sending coin to Phoenix Wallet is actually opening a LN channel with a percentage of your 'deposit' going to Phoenix.

I hope so, that sounds good! Either way, I like it

Isn't it just a proper implementation of multi-part payments? It should not matter if all parts (HTLCs) are sent from the same channel; all of them must use the same payment hash.

By the way, an iOS version is supposed to be released in Q1 2021.

This topic deserves a bump I've been using Phoenix Wallet a bit more lately, and I'm quite happy with how well-connected it is. I get more failed payments on BlueWallet than on Phoenix Wallet now, and Phoenix charges less fees. I paid around 0.01% fee on a 80,000 sat payment from Phoenix Wallet, while this would be a minimum of 0.3% on BlueWallet.

BlueWallet doesn't charge anything for on-chain deposits, Phoenix charges 0.1%. But that amount is even lower than the minimum BlueWallet charges to send funds out using LN, so Phoenix is cheaper in the end.
I wonder how they'll turn a profit though: 0.1% of a small deposit isn't even enough to cover the fees to open a channel, and each new on-chain deposit creates a new channel.

I was also happily surprised that I can use funds from multiple channels to make one payment that's larger than any individual channel could afford. I have no idea how they arrange that internally, but it works!

Thanks for that! A tip though: you should use proper quote-tags on Bitcointalk, as this forum is very strict on plagiarism. If you didn't type it, add quote tags I've edited my quote of your quote to fix this.
And welcome to Bitcointalk!

I'd say the fact that restoring from seed requires trust should be added here:

It depends: I don't trust the app (like most apps), so I wouldn't recommend installing it on a device that's in use for serious things. I've installed it on a tablet, and now that I think about it, the tablet holds some crypto already so it's not the best choice. But I'm running out of devices for testing
Apart from that, I'd recommend not only installing Phoenix, but testing several wallets and choosing on your own which you like most. These are the ones I've tested on Android:

• BlueWallet (custodial LN, non-custodial on-chain)
• Eclair (non-custodial LN, non-custodial on-chain
• Wallet of Satoshi (custodial LN)
• Mycelium (non-custodial on-chain)
• Coinomi (non-custodial on-chain, also many altcoins and some Forkcoins)
• Electrum (non-custodial on-chain)
• Bither/bitpie (I used this for low-value Forkcoins but nowadays it mostly crashes when I try that)

The usual disclaimer applies: "never send more than you're willing to lose", especially when using LN. But by all means, throw a few bucks tens of thousands of satoshis at it, and try it. Send from your LN-wallet, to a LN-casino to, to your other wallet, to another LN-casino and back to another one of your wallets. You can do all this in less than a minute, which is just amazing.

As for easy LN, I think BlueWallet and Phoenix both have their use case. I've been using BlueWallet a lot longer, so I'd like to know how you think they compare.

Yea, I wouldn't put larger amounts of money on any other mobile wallet either. I was also shocked on how seamless it is! It's so underrated in my opinion. Unfortunately they don't have an iOS app yet(which a lot of people use). Are you personally fine with recommending this to people as a hot wallet? Because I think I do.

I've installed Phoenix wallet, and could receive a few sat from BlueWallet just fine. However, even 15 sat doesn't work:
If I send from BlueWallet to Lightning-Roulette and from there to Phoenix, it works fine. I've had similar problems with Eclair (connected to Acinq): BlueWallet is usually better connected than using my own channels.

I am a bit surprised by the design choices they made: When I receive just a few sat, the Phoenix guys open a channel for me, and pay the on-chain transaction fees! On-chain transaction fees are currently very low, but it's still 246 sat, which is considerably more than the few sat I deposited. If I would close the channel, the Phoenix guys will lose money on it again. Their fees are really low so I hope this will be a profitable business model in the long run.

If everything works as they say it does, I'm quite impressed! It is indeed much easier than opening my own channels in Eclair.
However, it leads to many questions: right after my first incoming LN transaction, Phoenix opened the channel. But the channel isn't instantly confirmed, but it already allows me to make LN transactions. I have no idea how they pull that off.
Phoenix says the 12 seed words are enough to restore the wallet, that means they somehow link my open LN channel to those seed words (because the wallet is not custodial). Here too, I have no idea how they pull that off. For small amounts I'm totally fine trusting them, but for larger amounts it would be a good test to see if I can restore my channel in another application (again: I have no idea how).

I don't necessarily have an issue with the fees. They are high by bitcoin standards, but low when compared to using a credit card. My concern is more that the wallet could charge fees higher than what is advertised via intermediary LN nodes. 

I do see LN wallets in the future that are user friendly. I would predict we will see user-friendly desktop LN wallets before mobile wallets because coding mobile software is somewhat more complex than desktop software, and mobile OS will restrict what apps can do more than what macOS and Windows.

Over the long term, I would predict there are a handful of fairly large LN node operators that most end users will connect to, and will compete with, and connect to each other. The topology would somewhat resemble that of airport routes, but with many more routes.

With the above being said, I would envision future wallets LN wallets to connect to nodes with some kind of standardized URI that is unique to LN. I think most users will need to connect to one of the major hubs, and those that connect to multiple hubs will force each hub to compete on price. Something similar to what Phoenix does, except the user can choose which nodes to connect to.

I think LN wallets will use seeds, similar to what Phoenix uses, but will also automatically backup channel states to cloud storage during and after each transaction. This is important because without this, if you lose access to your wallet file, you will have no way to protect yourself against your counterparty from closing a channel using an old closing transaction.

Unfortunately, none of the above involves the creator of the software earning any kind of income.

Well yes, I guess doing it through Phoenix is less trustless than doing it through other Lightning wallets. But I guess it's sensible though as chances are people are going to use it for smaller transactions anyway, and it's in exchange for far easier usability. Probably a risk:reward that's worth it.

^Most probably a controversial opinion but yea. LOL

Yep. Probably a reasonable amount of fee since they do the channel handling I guess? Percentage based fees can suck but I guess lightning is mostly for smaller transactions anyway.

Definitely not the best as it's mostly subjective, but I'd say it's the easiest at the moment as far as I know.

No doubt the fees and privacy is a downside. But I guess these are the sacrifices for having an ultra mega nooby friendly service, as so the user doesn't need to care about nodes and servers and such, just easily make LN transactions almost like doing on-chain transactions. What do you think? Are there possible ways of handling things without sacrificing ease-of-use?

It looks like the end-user must send bitcoin to the devs(?) of the wallet software in order to have funds in your LN channel.

It is also unclear how your wallet will know the appropriate channel state if you have to restore from the seed, based on their FAQ.

From what I can tell, you are only connecting to the Phoenix Wallet LN nodes via LN, so all of your payments would need to route through them. They are already taking a fee to send/receive transactions, but their LN nodes could connect to other intermediary LN nodes they control to take additional, undisclosed fees.

I think a better setup for mobile wallets would be for the wallet to connect to a server, such as your home computer that will act as a LN node, and the wallet will instruct the server to send a LN payment or generate a LN invoice, and provide the invoice to the phone so it can display it to the end user. The server would handle things such as blockchain monitoring, and backups during every transaction.

it relies a lot on their servers which adds a level of centralization to this wallet and i never like it when the "wallet" is taking fees whenever the user wants to send coins even though it is very small. there are some trade-offs but they are at least very transparent about it so that is a good sign.
the wallet is also open source and can be compiled and run from the source code instead of downloading it from google play which is another positive sign.

all in all i think it is a good LN wallet but i still think there isn't any "best" LN wallets available yet.

Curious on your opinions on Phoenix Wallet[1]. While it's definitely not the best in a privacy perspective, I think it's probably the best noob-friendly(and when I meant noob, I meant literally tech illiterate) lightning wallet we have right now.

Besides privacy and a small cut they take with fees, I don't see any downside. Is there some thing I don't see? Is there any reason why we should not be recommending this wallet to the public(not the best recommendation I know, but for the people who aren't capable of learning to use wallets like Breez/BlueWallet etc)? Feel free to call me dumb if there's something I don't see.

Link to their faq: https://phoenix.acinq.co/faq

Disclaimer: I'm not affiliated with this wallet. Just genuinely curious.

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[1] https://phoenix.acinq.co/