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Funding Transaction

Funding Transactions are the first step in opening a Lightning Network payment channel.

This transaction’s output is to a simple 2-of-2 multi-sig address. The funding transaction is one of two Lightning Network transactions that occur on the Bitcoin blockchain; the other being the closing transaction. 

Opening a channel requires the funding transaction, creating and signing the initial commitment transactions, and then broadcasting the transaction to the Bitcoin blockchain with the 2 signatures. In this order, there is no trust required to open a channel because, by the time the transaction is live on the blockchain, there are ways to back out of the channel for both parties without the other’s permission.


  • BOLT #3: Bitcoin Transaction and Script FormatsGithub
  • Funding Transactions as Generalized Design Pattern for Off-chain Protocols Github