Lightning powered trades available on Hodl Hodl’s TESTNET

Today we’re officially announcing Lightning Network testing at testnet.hodlhodl.com.

In this blog post we want to give instructions and explain how everything works, and also thank everyone who helped us along the way.

Let’s get everything in order.

Overview

We recently announced support of the Lightning Network on Hodl Hodl, and now we’re ready to present our implementation to the public, on our testnet version of the exchange.

Our implementation of the Lightning Network allows every user to buy bitcoins and receive them directly into their Lightning wallet & to sell bitcoins directly from their Lightning wallet.

We remind everyone, that Lightning Network will be available on our mainnet version — hodlhodl.com — at the end of May.

How does it work?

For those familiar with Hodl Hodl, on the surface, the workflow remains almost the same:

  1. A contract between buyer and seller is created;
  2. Seller deposits bitcoins from his Lightning wallet;
  3. Buyer pays the seller according to the agreed upon payment method;
  4. Seller releases bitcoins directly to the buyers Lightning wallet.

The only difference is that for the contract lifetime we hold funds in our Lightning wallet which protects both buyer and seller from scams, and the contracts become cheaper, faster & simpler.

Lightning Network contracts will not affect regular Bitcoin onchain multisig contracts on Hodl Hodl: those will still be fully non-custodial and we won’t have access to your funds.

What you need for testing

  1. Account on testnet.hodlhodl.com;

In fact, you don’t even have to sign up, since we’ve generated bot accounts for testing purposes (you can sign in using one of those). In the offer list you may find users with the postscript “-bot” (e.g. “akeem-bot”). These are accounts you can freely log in to.

To do this, just enter the e-mail, which is always bot’s nickname + “@hodlhodl.com” (e.g. akeem-bot@hodlhodl.com). And the password is always “password”.

2. Lightning wallet on TESTNET;

We recommend you to use Eclair wallet for testing purposes.

3. Opened channel(-s) with public nodes;

The more channels the better. We recommend opening a channel with “ACINQ” node (go to Channels -> GREEN PLUS BUTTON -> ACINQ NODE) and in the popup window, check “Request liquidity from this node”

4. Enough inbound capacity;

The amount of a trade you start should be equal or less to your wallet inbound capacity.

Step by step instruction

In this section, we describe a step by step process of buying & selling bitcoins in a peer-to-peer manner on the Lightning Network.

  1. Go to testnet.hodlhodl.com & sign in;
  2. Change the exchange mode to Lightning;

We have separated the exchange modes for our customer’s convenience: On-chain & Lightning. If you want to trade:

  • On the base network, do nothing, the mode is called “On-chain” and is set by default.

When On-chain mode is selected, the site has a blue theme, with our standard logo

  • On the Lightning Network, press the Lightning button, in the header of site.

When Lightning mode is set, the site is purple & with lightning icon on top of our logo.

By choosing one of the exchange modes, you are able to create new offers and contracts, see the offer list, and see where the trade will occur: either on-chain or on the Lightning network.

  1. Create an offer or accept an existing one;

The offer creation process has only slightly changed, as there is only one minor difference between the two exchange modes.

2. Start of contract.

If you don’t want to wait until someone accepts your offer, you can accept one that already exists.

When someone accepts your offer or you are accepting an existing one, a contract between you and your counterparty is created.

Next are the statuses of the Lightning contract on our exchange explained in detail:

  • Contract status “Pending”;

This is the very beginning of the contract workflow. At this step, seller asks Hodl Hodl to generate the invoice & buyers is waiting.

  • Contract status “Depositing”;

We have generated the invoice for the seller & are waiting for him to pay it, thus, sending bitcoins to our wallet.

Only when seller deposits the funds, buyer can safely proceed with the payment.

  • Contract status “In progress”;

Seller has paid the invoice and has sent bitcoins to our wallet. Buyer is informed about this and instructed to pay the seller.

  • Contract status “Paid”;

Buyer has made the payment to the seller and was instructed to submit the invoice for receiving funds.

When seller has received the payment, the invoice from the buyer is needed in order for seller to make a release from our Lightning wallet to the buyer’s Lightning wallet.

  • Contract status “Releasing”;

Buyer has entered the invoice for receiving funds & seller has been instructed to make a release when he has received the payment.

  • Contract status “Completed”;

Seller received the payment from the buyer & released the bitcoins from our Lightning wallet to the buyer’s.

Contract is now completed!

Reporting issues

We’re still testing our implementation and some minor bugs are possible. We’re going to complete the implementation and release Lightning Network contracts to our mainnet by the end of May.

Feel free to report bugs, send us proposals or any questions you have relating to Lightning contracts:

Our nodes

We would appreciate it if you would connect to both our testnet and mainnet nodes & create public channels with them, in order to increase our inbound capacity.

Testnet node pubkey: 0316314db4eb542d17b9a7ac6f6651fcb319fd3da279197d4f09a890fc303ecf2d@178.63.16.7:9737

Mainnet node pubkey: 030bde3ee226b7cf456703811976e4241a929d11e5fc0549e9a1c6d10a8e23a738@178.63.16.7:9735

Thanks

For a long time we’ve been working hard to add Lightning Network functionality to Hodl Hodl, and many people & companies, one way or another, have participated.

Here we would like to thank everyone who contributed and helped us. Lightning Network is not easy to understand and implement, especially in a short time frame, therefore we thank everyone who helped us along the way.

Special thanks goes to David — the developer from the Hodl Hodl team, who alone studied and worked on the Lightning Network over the past few challenging months.

Thanks to him, and his sleepless nights, you can soon trade on the Lightning Network at hodlhodl.com.

We would also like to thank:

  • Hodl Hodl investors
  • Hodl Hodl volunteers
  • Lightning Labs
  • Satoshi Labs
  • Elizabeth Stark
  • Ketominer
  • Pavol Rusnak
  • Matt Odell
  • Sergej Kotliar
  • Peter McCormack
  • LNrus Telegram group community

Reach us

Hodl!