Ethereum: What is the difference between wallet balance, local balance and remote balance in the Lightning Network?

Understanding Ethereum Wallet Balances: A Primer on Local, Remote, and Balance in the Lightning Network

As a user of the Lightning Network (LND), it’s essential to grasp the different types of balances that exist. These balances are crucial for managing your assets across multiple nodes, ensuring seamless transactions between accounts. In this article, we’ll break down the differences between local balance, remote balance, and wallet balance in the context of the Ethereum network.

Wallet Balance

A wallet balance represents the total value stored within a user’s Ethereum wallet. This includes funds from all accounts on a node, including those that are currently active or suspended. Wallet balances can be positive or negative, depending on the state of your accounts:

• Positive balance

  

  : You have sufficient funds in each account to cover any fees associated with transactions.

• Negative balance: Your wallet has insufficient funds in one or more accounts to cover transaction costs.

Local Balance

A local balance is a snapshot of the current value stored within an Ethereum node’s wallet. It reflects the total value held by your wallet, taking into account only the funds currently available on the node. Local balances are useful for:

• Node maintenance

  : When nodes need to be updated or replaced, they can have different wallets with local balances that might not match the accounts’ current state.

• Transaction cost estimation: To estimate transaction fees based on your wallet’s balance.

Remote Balance

A remote balance is a snapshot of your wallet balance after all transactions are settled across multiple nodes. Remote balances take into account the following factors:

• Network congestion: The amount of time it takes for transactions to be processed, which can impact node performance and wallet balance.

• Node congestion: Similar to network congestion, but specific to individual nodes.

Ethereum LND Node Balances

On an LND node, you’ll typically see three types of balances:

• Local Balance: This is the current value stored in your user account on a local node. It’s usually displayed as a small amount, indicating the minimal funds available for transactions.

• Remote Balance: This is the sum of all local balances across multiple nodes that have your wallet set up. Remote balances are essential for estimating transaction fees and determining when to transfer or update your wallets.

• Wallet Balance: This represents the total value stored in your Ethereum wallet, including funds from all accounts on a node.

Example

Let’s say you have an LND user account with the following balances:

• Local Balance: 10 ether ( minimal funds available for transactions)

• Remote Balance: 15 ether (including funds from multiple nodes)

• Wallet Balance: 25.2 ether (total value stored in your Ethereum wallet)

In this example, your local balance is $10, remote balance would be $15 (including the funds from other nodes), and your wallet balance would be $25.2.

Conclusion

Understanding the difference between local, remote, and wallet balances is crucial for managing your assets on the Ethereum network. By grasping these concepts, you can:

• Monitor node performance and wallet balance

• Estimates transaction fees accurately.

• Make informed decisions about wallet updates or transfers

Remember to regularly review your balances to ensure they align with your account’s current state and transaction needs.