diff --git a/devtools/sql-rewrite.py b/devtools/sql-rewrite.py
index 35aebf4c5..f49a23871 100755
--- a/devtools/sql-rewrite.py
+++ b/devtools/sql-rewrite.py
@@ -41,6 +41,8 @@ class Sqlite3Rewriter(Rewriter):
             r'BIGSERIAL': 'INTEGER',
             r'CURRENT_TIMESTAMP\(\)': "strftime('%s', 'now')",
             r'INSERT INTO[ \t]+(.*)[ \t]+ON CONFLICT.*DO NOTHING;': 'INSERT OR IGNORE INTO \\1;',
+            # Rewrite "decode('abcd', 'hex')" to become "x'abcd'"
+            r'decode\((.*),\s*[\'\"]hex[\'\"]\)': 'x\\1',
         }
         return self.rewrite_types(query, typemapping)
 
diff --git a/lightningd/peer_htlcs.c b/lightningd/peer_htlcs.c
index ee1b68575..2595fde63 100644
--- a/lightningd/peer_htlcs.c
+++ b/lightningd/peer_htlcs.c
@@ -76,7 +76,7 @@ static bool htlc_in_update_state(struct channel *channel,
 
 	wallet_htlc_update(channel->peer->ld->wallet,
 			   hin->dbid, newstate, hin->preimage,
-			   hin->failcode, hin->failonion);
+			   hin->failcode, hin->failonion, NULL);
 
 	hin->hstate = newstate;
 	return true;
@@ -91,7 +91,8 @@ static bool htlc_out_update_state(struct channel *channel,
 		return false;
 
 	wallet_htlc_update(channel->peer->ld->wallet, hout->dbid, newstate,
-			   hout->preimage, hout->failcode, hout->failonion);
+			   hout->preimage, hout->failcode, hout->failonion,
+			   NULL);
 
 	hout->hstate = newstate;
 	return true;
@@ -1100,7 +1101,8 @@ static void fulfill_our_htlc_out(struct channel *channel, struct htlc_out *hout,
 	htlc_out_check(hout, __func__);
 
 	wallet_htlc_update(ld->wallet, hout->dbid, hout->hstate,
-			   hout->preimage, hout->failcode, hout->failonion);
+			   hout->preimage, hout->failcode, hout->failonion,
+			   NULL);
 	/* Update channel stats */
 	wallet_channel_stats_incr_out_fulfilled(ld->wallet,
 						channel->dbid,
@@ -1281,7 +1283,8 @@ void onchain_failed_our_htlc(const struct channel *channel,
 	hout->hstate = RCVD_REMOVE_HTLC;
 	htlc_out_check(hout, __func__);
 	wallet_htlc_update(ld->wallet, hout->dbid, hout->hstate,
-			   hout->preimage, hout->failcode, hout->failonion);
+			   hout->preimage, hout->failcode, hout->failonion,
+			   NULL);
 
 	if (hout->am_origin) {
 		assert(why != NULL);
diff --git a/wallet/db.c b/wallet/db.c
index 610ebb717..3e06ce436 100644
--- a/wallet/db.c
+++ b/wallet/db.c
@@ -592,6 +592,10 @@ static struct migration dbmigrations[] = {
      NULL},
     /* FIXME: Remove now-unused local_feerate_per_kw and remote_feerate_per_kw from channels */
     {SQL("INSERT INTO vars (name, intval) VALUES ('data_version', 0);"), NULL},
+    /* For outgoing HTLCs, we now keep a localmsg instead of a failcode.
+     * Turn anything in transition into a WIRE_TEMPORARY_NODE_FAILURE. */
+    {SQL("ALTER TABLE channel_htlcs ADD localfailmsg BLOB;"), NULL},
+    {SQL("UPDATE channel_htlcs SET localfailmsg=decode('2002', 'hex') WHERE malformed_onion != 0 AND direction = 1;"), NULL},
 };
 
 /* Leak tracking. */
diff --git a/wallet/test/run-wallet.c b/wallet/test/run-wallet.c
index 9578c6d38..c814b8d1f 100644
--- a/wallet/test/run-wallet.c
+++ b/wallet/test/run-wallet.c
@@ -1316,15 +1316,18 @@ static bool test_htlc_crud(struct lightningd *ld, const tal_t *ctx)
 	wallet_err = tal_free(wallet_err);
 
 	/* Update */
-	CHECK_MSG(transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, RCVD_ADD_HTLC, NULL, 0, NULL)),
+	CHECK_MSG(transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, RCVD_ADD_HTLC, NULL, 0, NULL, NULL)),
 		  "Update HTLC with null payment_key failed");
 	CHECK_MSG(
-		transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, SENT_REMOVE_HTLC, &payment_key, 0, NULL)),
+		transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, SENT_REMOVE_HTLC, &payment_key, 0, NULL, NULL)),
 	    "Update HTLC with payment_key failed");
 	onionreply = new_onionreply(tmpctx, tal_arrz(tmpctx, u8, 100));
 	CHECK_MSG(
-		transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, SENT_REMOVE_HTLC, NULL, 0, onionreply)),
-	    "Update HTLC with failreason failed");
+		transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, SENT_REMOVE_HTLC, NULL, 0, onionreply, NULL)),
+	    "Update HTLC with failonion failed");
+	CHECK_MSG(
+		transaction_wrap(w->db, wallet_htlc_update(w, in.dbid, SENT_REMOVE_HTLC, NULL, 0x2002, NULL, NULL)),
+	    "Update HTLC with failcode failed");
 
 	CHECK_MSG(transaction_wrap(w->db, wallet_htlc_save_out(w, chan, &out)),
 		  tal_fmt(ctx, "Save htlc_out failed: %s", wallet_err));
@@ -1334,6 +1337,9 @@ static bool test_htlc_crud(struct lightningd *ld, const tal_t *ctx)
 		  "Saving two HTLCs with the same data must not succeed.");
 	CHECK(wallet_err);
 	wallet_err = tal_free(wallet_err);
+	CHECK_MSG(
+		transaction_wrap(w->db, wallet_htlc_update(w, out.dbid, SENT_ADD_ACK_REVOCATION, NULL, 0, NULL, tal_arrz(tmpctx, u8, 100))),
+	    "Update outgoing HTLC with failmsg failed");
 
 	/* Attempt to load them from the DB again */
 	htlc_in_map_init(htlcs_in);
diff --git a/wallet/wallet.c b/wallet/wallet.c
index 8a918ec61..52efa640e 100644
--- a/wallet/wallet.c
+++ b/wallet/wallet.c
@@ -1755,11 +1755,13 @@ void wallet_htlc_save_out(struct wallet *wallet,
 	tal_free(stmt);
 }
 
+/* input htlcs use failcode & failonion, output htlcs use failmsg & failonion */
 void wallet_htlc_update(struct wallet *wallet, const u64 htlc_dbid,
 			const enum htlc_state new_state,
 			const struct preimage *payment_key,
 			enum onion_type failcode,
-			const struct onionreply *failonion)
+			const struct onionreply *failonion,
+			const u8 *failmsg)
 {
 	struct db_stmt *stmt;
 
@@ -1768,11 +1770,12 @@ void wallet_htlc_update(struct wallet *wallet, const u64 htlc_dbid,
 	assert(htlc_dbid);
 	stmt = db_prepare_v2(
 	    wallet->db, SQL("UPDATE channel_htlcs SET hstate=?, payment_key=?, "
-			    "malformed_onion=?, failuremsg=? WHERE id=?"));
+			    "malformed_onion=?, failuremsg=?, localfailmsg=?"
+			    " WHERE id=?"));
 
 	/* FIXME: htlc_state_in_db */
 	db_bind_int(stmt, 0, new_state);
-	db_bind_u64(stmt, 4, htlc_dbid);
+	db_bind_u64(stmt, 5, htlc_dbid);
 
 	if (payment_key)
 		db_bind_preimage(stmt, 1, payment_key);
@@ -1780,11 +1783,17 @@ void wallet_htlc_update(struct wallet *wallet, const u64 htlc_dbid,
 		db_bind_null(stmt, 1);
 
 	db_bind_int(stmt, 2, failcode);
+
 	if (failonion)
 		db_bind_onionreply(stmt, 3, failonion);
 	else
 		db_bind_null(stmt, 3);
 
+	if (failmsg)
+		db_bind_blob(stmt, 4, failmsg, tal_bytelen(failmsg));
+	else
+		db_bind_null(stmt, 4);
+
 	db_exec_prepared_v2(take(stmt));
 }
 
@@ -1872,6 +1881,7 @@ static bool wallet_stmt2htlc_out(struct wallet *wallet,
 		out->failonion = NULL;
 	else
 		out->failonion = db_column_onionreply(out, stmt, 8);
+
 	out->failcode = db_column_int_or_default(stmt, 9, 0);
 	out->in = NULL;
 
@@ -2002,6 +2012,7 @@ bool wallet_htlcs_load_out_for_channel(struct wallet *wallet,
 					     ", shared_secret"
 					     ", received_time"
 					     ", partid"
+					     ", localfailmsg"
 					     " FROM channel_htlcs"
 					     " WHERE direction = ?"
 					     " AND channel_id = ?"
diff --git a/wallet/wallet.h b/wallet/wallet.h
index f2b2afc56..c8c0a065c 100644
--- a/wallet/wallet.h
+++ b/wallet/wallet.h
@@ -582,7 +582,8 @@ void wallet_htlc_save_out(struct wallet *wallet,
  * @payment_key: the `payment_key` which hashes to the `payment_hash`,
  *   or NULL if unknown.
  * @failcode: the current failure code, or 0.
- * @failonion: the current failure message (from peer), or NULL.
+ * @failonion: the current failure onion message (from peer), or NULL.
+ * @failmsg: the current local failure message, or NULL.
  *
  * Used to update the state of an HTLC, either a `struct htlc_in` or a
  * `struct htlc_out` and optionally set the `payment_key` should the
@@ -592,7 +593,8 @@ void wallet_htlc_update(struct wallet *wallet, const u64 htlc_dbid,
 			const enum htlc_state new_state,
 			const struct preimage *payment_key,
 			enum onion_type failcode,
-			const struct onionreply *failonion);
+			const struct onionreply *failonion,
+			const u8 *failmsg);
 
 /**
  * wallet_htlcs_load_in_for_channel - Load incoming HTLCs associated with chan from DB.