Overview
Splicing is a Lightning Network protocol feature that enables adding funds to or removing funds from an existing Lightning channel without closing and reopening it. Before splicing, the only way to increase a channel's capacity was to close the existing channel (one on-chain transaction), wait for confirmations, and open a new larger channel (another on-chain transaction). Splicing collapses this into a single on-chain transaction while keeping the channel operational throughout the process.
This capability fundamentally changes how users and Lightning Service Providers manage channel liquidity. Instead of treating channels as fixed-capacity pipes that must be torn down and rebuilt, splicing allows channels to be dynamically resized as needs change. A merchant experiencing a surge in incoming payments can splice in additional funds, while a user who needs on-chain bitcoin can splice out without losing their channel connectivity.
How It Works
Splicing works by cooperatively creating a new funding transaction that spends the existing channel's funding output and produces a new funding output with the adjusted balance. The key innovation is that both the old and new channel states remain valid during the confirmation period, so payments can continue to flow without interruption.
Splice-In (adding funds):
Before: After splice-in:
┌──────────────────────┐ ┌──────────────────────────────┐
│ Channel: 0.5 BTC │ │ Channel: 0.8 BTC │
│ Alice: 0.3 │Bob: 0.2 │ ──► │ Alice: 0.6 │ Bob: 0.2 │
└──────────────────────┘ └──────────────────────────────┘
Alice added 0.3 BTC from
her on-chain wallet
Splice-Out (removing funds):
Before: After splice-out:
┌──────────────────────┐ ┌──────────────────────┐
│ Channel: 0.8 BTC │ │ Channel: 0.5 BTC │
│ Alice: 0.6 │Bob: 0.2 │ ──► │ Alice: 0.3 │Bob: 0.2 │
└──────────────────────┘ └──────────────────────┘
Alice withdrew 0.3 BTC
to an on-chain address
Only ONE on-chain transaction in each case.
Channel stays open and usable throughout.
The Splice Transaction
The splice transaction is a collaborative on-chain transaction that both channel partners sign. It spends the current 2-of-2 multisig funding output and creates a new 2-of-2 multisig output with the adjusted capacity. Additional inputs (for splice-in) or outputs (for splice-out) are included as needed.
Splice-In Transaction:
┌─────────────────────────────────────────┐
│ Inputs: │
│ - Current channel funding UTXO │
│ - Alice's on-chain UTXO (new funds) │
│ │
│ Outputs: │
│ - New channel funding UTXO (larger) │
│ - Change output (if any) │
└─────────────────────────────────────────┘
During the confirmation period, both the old and new funding transactions are considered valid. The channel peers maintain commitment transactions for both states simultaneously, ensuring that off-chain payments continue to work even before the splice transaction confirms. Once confirmed, the old state is discarded.
Use Cases
- Unified balance: Wallets can present on-chain and Lightning funds as a single balance, splicing between the two as needed for payments
- Dynamic capacity: Routing nodes can resize channels based on demand without service interruption
- On-chain payments from Lightning: A splice-out can send funds to any on-chain address, effectively allowing a Lightning channel to make on-chain payments
- Batched operations: Multiple splices can be combined into a single on-chain transaction, further reducing fees
Related Concepts
- Lightning Channel — the payment channel being resized by splicing
- Liquidity — splicing directly adjusts the capacity and liquidity distribution of a channel
- Capacity (Lightning) — the total channel capacity that splicing modifies
- Submarine Swap — an alternative method for moving funds between on-chain and Lightning without splicing