Good morning Thomas,

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‐‐‐‐‐‐‐ Original Message ‐‐‐‐‐‐‐
On March 19, 2018 6:24 AM, Thomas Steenholdt 
<tsteenho...@cascadetechnologypartners.com> wrote:

> Hi,
>
> I've been trying to figure out the mechanics of Lightning fees, especially in 
> the case of routed payments. Unfortunately, I haven't had any success in 
> finding a high level description on the topic.
>
> I'm hoping somebody is able to point me in the right direction?

BOLT spec https://github.com/lightningnetwork/lightning-rfc contains 
everything, but is very detailed and contains the topic in multiple places.

> Example:
>
> A multi-hop routed payment where A needs to pay D through B and C. 
> Established channels are A -> B -> C -> D.
>
> What I'm looking for is a high level explanation of how fees are established, 
> announced and ultimately claimed in a payment like this. Some of the 
> questions that come to mind are:
>
> - Does A know ahead of time the fees on B and C, or only when trying to set 
> up the payment? And how?

Yes.  Node gossip, the `channel_update` message in BOLT#7.  This message, 
contains `fee_base_msat` and `fee_proportional_millionths`.  For each channel, 
there are two `channel_update` messages, one from each direction.  For example 
B<->C channel, B announces its fee for B->C transfers while C announnces its 
fee for C->B transfers.

The A may have obsolete information about fees (e.g. B or C change their fee 
but their `channel_update` has not propagated to A yet).  In this case, payment 
routing will fail, but the `channel_update` will also be sent as part of the 
error message returned by payment routing failure.

> - How does A know the amount of fees that need to be added to the payment to 
> cover all fees?

It computes it.  If D is to be given a payment with value `msatoshi` then it 
computes first the C->D fee, which is the C->D `fee_base_msat` +  (C->D 
`fee_proportion_millionts` * `msatoshi` / 1,000,000).  Add that to `msatoshi` 
and that is the payment that needs to reach C, so A computes the payment from 
B->C similarly, except the `msatoshi` is replaced with the payment that should 
reach C.  Then A knows how much it has to give to B.

> - Is D aware of the full amount including fees or is that somehow hidden?

No.  D is only aware of how much C offers it.

> - How are the fees actually claimed (who ends up paying whom)?

A offer B a value that is higher than what A instruct B to forward to C.  The 
difference is the fee.  Since the highest value is at the source A, A is the 
one, who ends up paying the entire fee.

Regards,
ZmnSCPxj
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