breez-lnd

This document is written for people who are eager to do something with lightning network daemon (lnd). Current workflow is big because we recreate the whole network by ourselves, next versions will use the started btcd bitcoin node in testnet and faucet wallet from which you will get the bitcoins.

In current readme we decribe the steps which are needed to recreate following schema, and send payment from Alice to Bob.

+ ----- +                   + --- +
| Alice | <--- channel ---> | Bob |  <---   Bob and Alice are the lightning network daemons which 
+ ----- +                   + --- +         creates the channel and interact with each other using   
    |                          |            Bitcoin network as source of truth. 
    |                          |            
    + - - - -  - + - - - - - - +            
                 |
        + ---------------- +
        | Bitcoin network  |  <---  In current scenario for simplicity we create only one  
        + ---------------- +        "btcd" node which represents the Bitcoin network, in  
                                    real situation Alice and Bob will likely be 
                                    connected to different Bitcoin nodes.

Prerequisites

Name  | Version

--------|--------- docker-compose | 1.9.0 docker | 1.13.0

General workflow is following:

Create Bitcoin network
Create Alice node
Create Bob node
Initialize Alice node with some amount of bitcoins
Open channel between Alice and Bob
Send payment from Alice to Bob

Start the btcd, create Alice address and mine some bitcoins.

# Create "btcd" node:
$ docker-compose up -d "btcd"

# Run "Alice" container and log into it:
$ docker-compose up -d "alice"
$ docker exec -i -t "alice" bash

# Generate new backward compatible "segwit" "alice" address:
alice$ lncli newaddress np2wkh 

# Recreate "btcd" node and set "alice" address as mining address:
$ MINING_ADDRESS=<alice_address> docker-compose up -d "btcd"

# Generate 201 block (we need at least "100 >=" blocks because of coinbase 
# block maturity and "250 >=" in order to activate segwit):
$ docker-compose run btcctl generate 250

# Check that segwit is active:
$ docker-compose run btcctl getblockchaininfo | grep -A 1 segwit

Now we have btcd node turned on and some amount of bitcoins mined on Alice address. But in order lnd saw them lets restart the lnd daemon.

# Stop "Alice" container:
$ docker-compose stop "alice"

# Start "Alice" container and log into it:
$ docker-compose up --no-recreate -d "alice"
$ docker exec -i -t "alice" bash

# Check "Alice" balance:
alice$ lncli walletbalance --witness_only=true

Connect Bob node to Alice node.

# Run "Bob" node and log into it:
$ docker-compose up --no-recreate -d "bob"
$ docker exec -i -t "bob" bash

# Get the identity address of "Bob" node:
bob$ lncli getinfo

# Get the IP address of "Bob" node:
$ docker inspect "bob" | grep IPAddress

# Connect "Alice" to the "Bob" node:
alice$ lncli connect <bob_identity_address>@<bob_host>:10011

# Check list of peers on "Alice" side:
alice$ lncli listpeers

# Check list of peers on "Bob" side:
bob$ lncli listpeers

Create Alice<->Bob channel.

# Open the channel with "Bob":
alice$ lncli openchannel --node_key=<bob_lightning_id> --num_confs=1 --local_amt=1000000 --push_amt=0

# Include funding transaction in block thereby open the channel:
$ docker-compose run btcctl generate 1

# Check that channel with "Bob" was created:
alice$ lncli listchannels

Send the payment form "Alice" to "Bob".

# Add invoice on "Bob" side:
bob> lncli addinvoice --value=10000

# Send payment from "Alice" to "Bob":
alice> lncli sendpayment --pay_req=<encoded_invoice>

# Check "Alice" channel balance was descreased on sent amount:
alice> lncli listchannels

# Check "Bob" channel balance was increased on sent amount:
bob> lncli listchannels

Now we have open channel in which we sent only one payment, lets imagine that we sent a lots of them and we ok to close channel. Lets do it.

# List the "Alice" channel and retrieve "channel_point" which represent
# the opened channel:
alice> lncli listchannels

# Channel point consist of two numbers devided by ":" the first on is 
# "funding_txid" and the second one is "output_index":
alice> lncli closechannel --funding_txid=<funding_txid> --output_index=<output_index>

# Include close transaction in block thereby close the channel:
$ docker-compose run btcctl generate 1

# Check "Alice" on-chain balance was descresed on sent amount:
alice> lncli walletbalance

# Check "Bob" on-chain balance was increased on sent amount:
bob> lncli walletbalance

Questions

How to see alice | bob | btcd logs?

docker-compose logs <alice|bob|btcd>