This initiative addresses the growing need for handling larger amounts of Bitcoin through the Lightning network, motivated by the desire to reduce transaction fees and Layer 1 traffic. Unlike existing Lightning wallets, which are designed for small payments and hold a minimal portion of a user's Bitcoins, this project focuses on securing larger transactions that users may want to protect more rigorously.

The project is currently in an experimental phase, with the goal of assessing the technical feasibility and user experience of combining a Lightning wallet with a hardware wallet. The developer plans to build upon the Phoenix project by ACINQ for the Lightning wallet's source code and to utilize a Ledger device for the hardware aspect, capitalizing on its widespread use and previous successful integrations. This phase aims to produce a prototype application capable of executing payments on the Lightning network, with transaction signing delegated to the hardware wallet.

A significant challenge identified in this venture is the integration of hardware security without compromising user convenience. Current Lightning wallets automatically search for payment paths, a process invisible to the user that could become cumbersome if each attempt requires hardware validation. Additionally, receiving payments might introduce delays due to the necessity of user validation before completion. The project seeks to explore optimal solutions for these challenges, aiming for a seamless integration of hardware security mechanisms into the Lightning protocol.

The lack of hardware-protected Lightning wallets, as well as ongoing projects addressing this niche, underscores the novelty of this endeavor. It differentiates from existing solutions like the Bitbox hardware wallet, which offers limited security for Lightning transactions, and Electrum's approach, which facilitates channel opening and closing with hardware wallets but not the actual transaction signing within channels. This project targets end-users desiring secure, large-amount transactions on the Lightning network, contrasting with initiatives focused on nodes relaying payments without direct user interaction.

Feedback is sought from individuals who self-custody Bitcoin and prioritize securing their assets with hardware wallets. The project narrows its focus to the security aspects of Lightning transactions, despite acknowledging other existing challenges like network liquidity. This strategic focus stems from the belief that enhancing transaction security is paramount for user confidence and control over their funds on the Lightning network.