Merge pull request #9610 from lightningnetwork/rbf-staging

multi: integrate rbf changes from staging branch

channeldb/channel.go

@@ -4104,6 +4104,34 @@ func (c *OpenChannel) AbsoluteThawHeight() (uint32, error) {
 	return c.ThawHeight, nil
 }
 
+// DeriveHeightHint derives the block height for the channel opening.
+func (c *OpenChannel) DeriveHeightHint() uint32 {
+	// As a height hint, we'll try to use the opening height, but if the
+	// channel isn't yet open, then we'll use the height it was broadcast
+	// at. This may be an unconfirmed zero-conf channel.
+	heightHint := c.ShortChanID().BlockHeight
+	if heightHint == 0 {
+		heightHint = c.BroadcastHeight()
+	}
+
+	// Since no zero-conf state is stored in a channel backup, the below
+	// logic will not be triggered for restored, zero-conf channels. Set
+	// the height hint for zero-conf channels.
+	if c.IsZeroConf() {
+		if c.ZeroConfConfirmed() {
+			// If the zero-conf channel is confirmed, we'll use the
+			// confirmed SCID's block height.
+			heightHint = c.ZeroConfRealScid().BlockHeight
+		} else {
+			// The zero-conf channel is unconfirmed. We'll need to
+			// use the FundingBroadcastHeight.
+			heightHint = c.BroadcastHeight()
+		}
+	}
+
+	return heightHint
+}
+
 func putChannelCloseSummary(tx kvdb.RwTx, chanID []byte,
 	summary *ChannelCloseSummary, lastChanState *OpenChannel) error {
 

contractcourt/chain_watcher.go

@@ -281,7 +281,7 @@ func newChainWatcher(cfg chainWatcherConfig) (*chainWatcher, error) {
 	}
 
 	// Get the channel opening block height.
-	heightHint := deriveHeightHint(chanState)
+	heightHint := chanState.DeriveHeightHint()
 
 	// We'll register for a notification to be dispatched if the funding
 	// output is spent.
@@ -1328,34 +1328,6 @@ func deriveFundingPkScript(chanState *channeldb.OpenChannel) ([]byte, error) {
 	return fundingPkScript, nil
 }
 
-// deriveHeightHint derives the block height for the channel opening.
-func deriveHeightHint(chanState *channeldb.OpenChannel) uint32 {
-	// As a height hint, we'll try to use the opening height, but if the
-	// channel isn't yet open, then we'll use the height it was broadcast
-	// at. This may be an unconfirmed zero-conf channel.
-	heightHint := chanState.ShortChanID().BlockHeight
-	if heightHint == 0 {
-		heightHint = chanState.BroadcastHeight()
-	}
-
-	// Since no zero-conf state is stored in a channel backup, the below
-	// logic will not be triggered for restored, zero-conf channels. Set
-	// the height hint for zero-conf channels.
-	if chanState.IsZeroConf() {
-		if chanState.ZeroConfConfirmed() {
-			// If the zero-conf channel is confirmed, we'll use the
-			// confirmed SCID's block height.
-			heightHint = chanState.ZeroConfRealScid().BlockHeight
-		} else {
-			// The zero-conf channel is unconfirmed. We'll need to
-			// use the FundingBroadcastHeight.
-			heightHint = chanState.BroadcastHeight()
-		}
-	}
-
-	return heightHint
-}
-
 // handleCommitSpend takes a spending tx of the funding output and handles the
 // channel close based on the closure type.
 func (c *chainWatcher) handleCommitSpend(

docs/release-notes/release-notes-0.19.0.md

@@ -93,6 +93,27 @@
 
 # New Features
 
+* Add support for [archiving channel backup](https://github.com/lightningnetwork/lnd/pull/9232)
+ in a designated folder which allows for easy referencing in the future. A new 
+ config is added `disable-backup-archive`, with default set to false, to 
+ determine if previous channel backups should be archived or not.
+
+## Protocol Updates
+
+* `lnd` now [supports the new RBF cooperative close
+flow](https://github.com/lightningnetwork/lnd/pull/9610). Unlike the old flow,
+this version now uses RBF to enable either side to increase their fee rate using
+their _own_ channel funds. This removes the old "negotiation" logic that could
+fail, with a version where either side can increase the fee on their coop close
+transaction using their channel balance. 
+
+This new feature can be activated with a new config flag:
+`--protocol.rbf-coop-close`.
+
+With this new co-op close type, users can issue multiple `lncli closechannnel`
+commands with increasing fee rates to use RBF to bump an existing signed co-op
+close transaction.
+
 * [Support](https://github.com/lightningnetwork/lnd/pull/8390) for 
   [experimental endorsement](https://github.com/lightning/blips/pull/27) 
   signal relay was added. This signal has *no impact* on routing, and
@@ -106,10 +127,7 @@
   initial historical sync may be blocked due to a race condition in handling the
   syncer's internal state.
 
-* Add support for [archiving channel backup](https://github.com/lightningnetwork/lnd/pull/9232)
- in a designated folder which allows for easy referencing in the future. A new 
- config is added `disable-backup-archive`, with default set to false, to 
- determine if previous channel backups should be archived or not.
+
 
 * [The max fee rate](https://github.com/lightningnetwork/lnd/pull/9491) is now
   respected when a coop close is initiated. Before the max fee rate would only
@@ -432,6 +450,7 @@ The underlying functionality between those two options remain the same.
 * Keagan McClelland
 * Nishant Bansal
 * Oliver Gugger
+* Olaoluwa Osuntokun
 * Pins
 * Viktor Tigerström
 * Yong Yu

feature/default_sets.go

@@ -103,4 +103,8 @@ var defaultSetDesc = setDesc{
 	lnwire.ExperimentalEndorsementOptional: {
 		SetNodeAnn: {}, // N
 	},
+	lnwire.RbfCoopCloseOptionalStaging: {
+		SetInit:    {}, // I
+		SetNodeAnn: {}, // N
+	},
 }

feature/manager.go

@@ -73,6 +73,10 @@ type Config struct {
 	// forwarding experimental endorsement.
 	NoExperimentalEndorsement bool
 
+	// NoRbfCoopClose unsets any bits that signal support for using RBF for
+	// coop close.
+	NoRbfCoopClose bool
+
 	// CustomFeatures is a set of custom features to advertise in each
 	// set.
 	CustomFeatures map[Set][]lnwire.FeatureBit
@@ -209,11 +213,13 @@ func newManager(cfg Config, desc setDesc) (*Manager, error) {
 			raw.Unset(lnwire.SimpleTaprootOverlayChansOptional)
 			raw.Unset(lnwire.SimpleTaprootOverlayChansRequired)
 		}
-
 		if cfg.NoExperimentalEndorsement {
 			raw.Unset(lnwire.ExperimentalEndorsementOptional)
 			raw.Unset(lnwire.ExperimentalEndorsementRequired)
 		}
+		if cfg.NoRbfCoopClose {
+			raw.Unset(lnwire.RbfCoopCloseOptionalStaging)
+		}
 
 		for _, custom := range cfg.CustomFeatures[set] {
 			if custom > set.Maximum() {

htlcswitch/interfaces.go

@@ -196,7 +196,7 @@ type FlushHookID uint64
 
 // LinkDirection is used to query and change any link state on a per-direction
 // basis.
-type LinkDirection bool
+type LinkDirection = bool
 
 const (
 	// Incoming is the direction from the remote peer to our node.

htlcswitch/switch.go

@@ -2,6 +2,7 @@ package htlcswitch
 
 import (
 	"bytes"
+	"context"
 	"errors"
 	"fmt"
 	"math/rand"
@@ -125,6 +126,9 @@ type ChanClose struct {
 
 	// Err is used by request creator to receive request execution error.
 	Err chan error
+
+	// Ctx is a context linked to the lifetime of the caller.
+	Ctx context.Context //nolint:containedctx
 }
 
 // Config defines the configuration for the service. ALL elements within the
@@ -1413,7 +1417,7 @@ func (s *Switch) teardownCircuit(pkt *htlcPacket) error {
 // targetFeePerKw parameter should be the ideal fee-per-kw that will be used as
 // a starting point for close negotiation. The deliveryScript parameter is an
 // optional parameter which sets a user specified script to close out to.
-func (s *Switch) CloseLink(chanPoint *wire.OutPoint,
+func (s *Switch) CloseLink(ctx context.Context, chanPoint *wire.OutPoint,
 	closeType contractcourt.ChannelCloseType,
 	targetFeePerKw, maxFee chainfee.SatPerKWeight,
 	deliveryScript lnwire.DeliveryAddress) (chan interface{}, chan error) {
@@ -1427,9 +1431,10 @@ func (s *Switch) CloseLink(chanPoint *wire.OutPoint,
 		ChanPoint:      chanPoint,
 		Updates:        updateChan,
 		TargetFeePerKw: targetFeePerKw,
-		MaxFee:         maxFee,
 		DeliveryScript: deliveryScript,
 		Err:            errChan,
+		MaxFee:         maxFee,
+		Ctx:            ctx,
 	}
 
 	select {

input/fuzz_script_is_op_return_test.go

@@ -0,0 +1,51 @@
+package input
+
+import (
+	"testing"
+
+	"github.com/btcsuite/btcd/chaincfg"
+	"github.com/btcsuite/btcd/txscript"
+	"github.com/stretchr/testify/require"
+)
+
+// FuzzScriptIsOpReturn fuzzes the ScriptIsOpReturn function.
+func FuzzScriptIsOpReturn(f *testing.F) {
+	// Seed the corpus with some representative inputs.
+	f.Add([]byte{})
+	f.Add([]byte{txscript.OP_RETURN})
+
+	// Use our canonical ScriptBuilder to produce a valid OP_RETURN script.
+	builder := txscript.NewScriptBuilder()
+	builder.AddOp(txscript.OP_RETURN)
+	builder.AddData([]byte("valid data"))
+	script, err := builder.Script()
+	require.NoError(f, err)
+	f.Add(script)
+
+	// An example of a script that does not start with OP_RETURN.
+	f.Add([]byte{txscript.OP_DUP, txscript.OP_RETURN})
+
+	f.Fuzz(func(t *testing.T, pkScript []byte) {
+		result := ScriptIsOpReturn(pkScript)
+
+		var expected bool
+		if len(script) == 0 || script[0] != txscript.OP_RETURN {
+			expected = false
+		} else {
+			scriptClass, _, _, err := txscript.ExtractPkScriptAddrs(
+				pkScript, &chaincfg.MainNetParams,
+			)
+			if err != nil {
+				t.Fatalf("unable to extract pk script "+
+					"addresses: %v", err)
+			}
+
+			expected = scriptClass == txscript.NullDataTy
+		}
+
+		if result != expected {
+			t.Fatalf("for script %x, expected ScriptIsOpReturn=%v;"+
+				" got %v", script, expected, result)
+		}
+	})
+}

input/script_utils.go

@@ -3239,3 +3239,36 @@ func ComputeCommitmentPoint(commitSecret []byte) *btcec.PublicKey {
 	_, pubKey := btcec.PrivKeyFromBytes(commitSecret)
 	return pubKey
 }
+
+// ScriptIsOpReturn returns true if the passed script is an OP_RETURN script.
+//
+// Lifted from the txscript package:
+// https://github.com/btcsuite/btcd/blob/cc26860b40265e1332cca8748c5dbaf3c81cc094/txscript/standard.go#L493-L526.
+//
+//nolint:ll
+func ScriptIsOpReturn(script []byte) bool {
+	// A null script is of the form:
+	//  OP_RETURN <optional data>
+	//
+	// Thus, it can either be a single OP_RETURN or an OP_RETURN followed by
+	// a data push up to MaxDataCarrierSize bytes.
+
+	// The script can't possibly be a null data script if it doesn't start
+	// with OP_RETURN.  Fail fast to avoid more work below.
+	if len(script) < 1 || script[0] != txscript.OP_RETURN {
+		return false
+	}
+
+	// Single OP_RETURN.
+	if len(script) == 1 {
+		return true
+	}
+
+	// OP_RETURN followed by data push up to MaxDataCarrierSize bytes.
+	tokenizer := txscript.MakeScriptTokenizer(0, script[1:])
+
+	return tokenizer.Next() && tokenizer.Done() &&
+		(txscript.IsSmallInt(tokenizer.Opcode()) ||
+			tokenizer.Opcode() <= txscript.OP_PUSHDATA4) &&
+		len(tokenizer.Data()) <= txscript.MaxDataCarrierSize
+}

itest/list_on_test.go

@@ -678,6 +678,10 @@ var allTestCases = []*lntest.TestCase{
 		Name:     "access perm",
 		TestFunc: testAccessPerm,
 	},
+	{
+		Name:     "rbf coop close",
+		TestFunc: testCoopCloseRbf,
+	},
 }
 
 // appendPrefixed is used to add a prefix to each test name in the subtests

itest/lnd_coop_close_rbf_test.go

@@ -0,0 +1,133 @@
+package itest
+
+import (
+	"github.com/btcsuite/btcd/btcutil"
+	"github.com/lightningnetwork/lnd/lntest"
+	"github.com/lightningnetwork/lnd/lnwallet/chainfee"
+	"github.com/stretchr/testify/require"
+)
+
+func testCoopCloseRbf(ht *lntest.HarnessTest) {
+	rbfCoopFlags := []string{"--protocol.rbf-coop-close"}
+
+	// Set the fee estimate to 1sat/vbyte. This ensures that our manually
+	// initiated RBF attempts will always be successful.
+	ht.SetFeeEstimate(250)
+	ht.SetFeeEstimateWithConf(250, 6)
+
+	// To kick things off, we'll create two new nodes, then fund them with
+	// enough coins to make a 50/50 channel.
+	cfgs := [][]string{rbfCoopFlags, rbfCoopFlags}
+	params := lntest.OpenChannelParams{
+		Amt:     btcutil.Amount(1000000),
+		PushAmt: btcutil.Amount(1000000 / 2),
+	}
+	chanPoints, nodes := ht.CreateSimpleNetwork(cfgs, params)
+	alice, bob := nodes[0], nodes[1]
+	chanPoint := chanPoints[0]
+
+	// Now that both sides are active with a funded channel, we can kick
+	// off the test.
+	//
+	// To start, we'll have Alice try to close the channel, with a fee rate
+	// of 5 sat/byte.
+	aliceFeeRate := chainfee.SatPerVByte(5)
+	aliceCloseStream, aliceCloseUpdate := ht.CloseChannelAssertPending(
+		alice, chanPoint, false,
+		lntest.WithCoopCloseFeeRate(aliceFeeRate),
+		lntest.WithLocalTxNotify(),
+	)
+
+	// Confirm that this new update was at 5 sat/vb.
+	alicePendingUpdate := aliceCloseUpdate.GetClosePending()
+	require.NotNil(ht, aliceCloseUpdate)
+	require.Equal(
+		ht, int64(aliceFeeRate), alicePendingUpdate.FeePerVbyte,
+	)
+	require.True(ht, alicePendingUpdate.LocalCloseTx)
+
+	// Now, we'll have Bob attempt to RBF the close transaction with a
+	// higher fee rate, double that of Alice's.
+	bobFeeRate := aliceFeeRate * 2
+	bobCloseStream, bobCloseUpdate := ht.CloseChannelAssertPending(
+		bob, chanPoint, false, lntest.WithCoopCloseFeeRate(bobFeeRate),
+		lntest.WithLocalTxNotify(),
+	)
+
+	// Confirm that this new update was at 10 sat/vb.
+	bobPendingUpdate := bobCloseUpdate.GetClosePending()
+	require.NotNil(ht, bobCloseUpdate)
+	require.Equal(ht, bobPendingUpdate.FeePerVbyte, int64(bobFeeRate))
+	require.True(ht, bobPendingUpdate.LocalCloseTx)
+
+	var err error
+
+	// Alice should've also received a similar update that Bob has
+	// increased the closing fee rate to 10 sat/vb with his settled funds.
+	aliceCloseUpdate, err = ht.ReceiveCloseChannelUpdate(aliceCloseStream)
+	require.NoError(ht, err)
+	alicePendingUpdate = aliceCloseUpdate.GetClosePending()
+	require.NotNil(ht, aliceCloseUpdate)
+	require.Equal(ht, alicePendingUpdate.FeePerVbyte, int64(bobFeeRate))
+	require.False(ht, alicePendingUpdate.LocalCloseTx)
+
+	// We'll now attempt to make a fee update that increases Alice's fee
+	// rate by 6 sat/vb, which should be rejected as it is too small of an
+	// increase for the RBF rules. The RPC API however will return the new
+	// fee. We'll skip the mempool check here as it won't make it in.
+	aliceRejectedFeeRate := aliceFeeRate + 1
+	_, aliceCloseUpdate = ht.CloseChannelAssertPending(
+		alice, chanPoint, false,
+		lntest.WithCoopCloseFeeRate(aliceRejectedFeeRate),
+		lntest.WithLocalTxNotify(), lntest.WithSkipMempoolCheck(),
+	)
+	alicePendingUpdate = aliceCloseUpdate.GetClosePending()
+	require.NotNil(ht, aliceCloseUpdate)
+	require.Equal(
+		ht, alicePendingUpdate.FeePerVbyte,
+		int64(aliceRejectedFeeRate),
+	)
+	require.True(ht, alicePendingUpdate.LocalCloseTx)
+
+	_, err = ht.ReceiveCloseChannelUpdate(bobCloseStream)
+	require.NoError(ht, err)
+
+	// We'll now attempt a fee update that we can't actually pay for. This
+	// will actually show up as an error to the remote party.
+	aliceRejectedFeeRate = 100_000
+	_, _ = ht.CloseChannelAssertPending(
+		alice, chanPoint, false,
+		lntest.WithCoopCloseFeeRate(aliceRejectedFeeRate),
+		lntest.WithLocalTxNotify(),
+		lntest.WithExpectedErrString("cannot pay for fee"),
+	)
+
+	// At this point, we'll have Alice+Bob reconnect so we can ensure that
+	// we can continue to do RBF bumps even after a reconnection.
+	ht.DisconnectNodes(alice, bob)
+	ht.ConnectNodes(alice, bob)
+
+	// Next, we'll have Alice double that fee rate again to 20 sat/vb.
+	aliceFeeRate = bobFeeRate * 2
+	aliceCloseStream, aliceCloseUpdate = ht.CloseChannelAssertPending(
+		alice, chanPoint, false,
+		lntest.WithCoopCloseFeeRate(aliceFeeRate),
+		lntest.WithLocalTxNotify(),
+	)
+
+	alicePendingUpdate = aliceCloseUpdate.GetClosePending()
+	require.NotNil(ht, aliceCloseUpdate)
+	require.Equal(
+		ht, alicePendingUpdate.FeePerVbyte, int64(aliceFeeRate),
+	)
+	require.True(ht, alicePendingUpdate.LocalCloseTx)
+
+	// To conclude, we'll mine a block which should now confirm Alice's
+	// version of the coop close transaction.
+	block := ht.MineBlocksAndAssertNumTxes(1, 1)[0]
+
+	// Both Alice and Bob should trigger a final close update to signal the
+	// closing transaction has confirmed.
+	aliceClosingTxid := ht.WaitForChannelCloseEvent(aliceCloseStream)
+	ht.AssertTxInBlock(block, aliceClosingTxid)
+}

itest/lnd_coop_close_with_htlcs_test.go

@@ -1,6 +1,7 @@
 package itest
 
 import (
+	"fmt"
 	"testing"
 
 	"github.com/btcsuite/btcd/btcutil"
@@ -10,6 +11,7 @@ import (
 	"github.com/lightningnetwork/lnd/lnrpc/routerrpc"
 	"github.com/lightningnetwork/lnd/lnrpc/walletrpc"
 	"github.com/lightningnetwork/lnd/lntest"
+	"github.com/lightningnetwork/lnd/lntest/node"
 	"github.com/lightningnetwork/lnd/lntest/wait"
 	"github.com/lightningnetwork/lnd/lntypes"
 	"github.com/lightningnetwork/lnd/lnwallet/chainfee"
@@ -23,23 +25,47 @@ import (
 // will have the receiver settle the invoice and observe that the channel gets
 // torn down after settlement.
 func testCoopCloseWithHtlcs(ht *lntest.HarnessTest) {
-	ht.Run("no restart", func(t *testing.T) {
-		tt := ht.Subtest(t)
-		coopCloseWithHTLCs(tt)
-	})
+	rbfCoopFlags := []string{"--protocol.rbf-coop-close"}
 
-	ht.Run("with restart", func(t *testing.T) {
-		tt := ht.Subtest(t)
-		coopCloseWithHTLCsWithRestart(tt)
-	})
+	for _, isRbf := range []bool{true, false} {
+		testName := fmt.Sprintf("no restart is_rbf=%v", isRbf)
+		ht.Run(testName, func(t *testing.T) {
+			tt := ht.Subtest(t)
+
+			var flags []string
+			if isRbf {
+				flags = rbfCoopFlags
+			}
+
+			alice := ht.NewNodeWithCoins("Alice", flags)
+			bob := ht.NewNodeWithCoins("bob", flags)
+
+			coopCloseWithHTLCs(tt, alice, bob)
+		})
+	}
+
+	for _, isRbf := range []bool{true, false} {
+		testName := fmt.Sprintf("with restart is_rbf=%v", isRbf)
+		ht.Run(testName, func(t *testing.T) {
+			tt := ht.Subtest(t)
+
+			var flags []string
+			if isRbf {
+				flags = rbfCoopFlags
+			}
+
+			alice := ht.NewNodeWithCoins("Alice", flags)
+			bob := ht.NewNodeWithCoins("bob", flags)
+
+			coopCloseWithHTLCsWithRestart(tt, alice, bob)
+		})
+	}
 }
 
 // coopCloseWithHTLCs tests the basic coop close scenario which occurs when one
 // channel party initiates a channel shutdown while an HTLC is still pending on
 // the channel.
-func coopCloseWithHTLCs(ht *lntest.HarnessTest) {
-	alice := ht.NewNodeWithCoins("Alice", nil)
-	bob := ht.NewNodeWithCoins("bob", nil)
+func coopCloseWithHTLCs(ht *lntest.HarnessTest, alice, bob *node.HarnessNode) {
 	ht.ConnectNodes(alice, bob)
 
 	// Here we set up a channel between Alice and Bob, beginning with a
@@ -131,9 +157,9 @@ func coopCloseWithHTLCs(ht *lntest.HarnessTest) {
 // is still pending on the channel but this time it ensures that the shutdown
 // process continues as expected even if a channel re-establish happens after
 // one party has already initiated the shutdown.
-func coopCloseWithHTLCsWithRestart(ht *lntest.HarnessTest) {
-	alice := ht.NewNodeWithCoins("Alice", nil)
-	bob := ht.NewNodeWithCoins("bob", nil)
+func coopCloseWithHTLCsWithRestart(ht *lntest.HarnessTest, alice,
+	bob *node.HarnessNode) {
+
 	ht.ConnectNodes(alice, bob)
 
 	// Open a channel between Alice and Bob with the balance split equally.
@@ -219,8 +245,8 @@ func coopCloseWithHTLCsWithRestart(ht *lntest.HarnessTest) {
 	}, defaultTimeout)
 	require.NoError(ht, err)
 
-	// Wait for the close tx to be in the Mempool and then mine 6 blocks
-	// to confirm the close.
+	// Wait for the close tx to be in the Mempool and then mine 6 blocks to
+	// confirm the close.
 	closingTx := ht.AssertClosingTxInMempool(
 		chanPoint, lnrpc.CommitmentType_LEGACY,
 	)

itest/lnd_revocation_test.go

@@ -109,7 +109,11 @@ func breachRetributionTestCase(ht *lntest.HarnessTest,
 	// broadcasting his current channel state. This is actually the
 	// commitment transaction of a prior *revoked* state, so he'll soon
 	// feel the wrath of Carol's retribution.
-	_, breachTXID := ht.CloseChannelAssertPending(bob, chanPoint, true)
+	_, breachCloseUpd := ht.CloseChannelAssertPending(bob, chanPoint, true)
+	closeUpd := breachCloseUpd.GetClosePending()
+	require.NotNil(ht, closeUpd)
+	breachTXID, err := chainhash.NewHash(closeUpd.Txid)
+	require.NoError(ht, err)
 
 	// Here, Carol sees Bob's breach transaction in the mempool, but is
 	// waiting for it to confirm before continuing her retribution. We
@@ -122,13 +126,13 @@ func breachRetributionTestCase(ht *lntest.HarnessTest,
 	// update, then ensure that the closing transaction was included in the
 	// block.
 	block := ht.MineBlocksAndAssertNumTxes(1, 1)[0]
-	ht.AssertTxInBlock(block, breachTXID)
+	ht.AssertTxInBlock(block, *breachTXID)
 
 	// Construct to_remote output which pays to Bob. Based on the output
 	// ordering, the first output in this breach tx is the to_remote
 	// output.
 	toRemoteOp := wire.OutPoint{
-		Hash:  breachTXID,
+		Hash:  *breachTXID,
 		Index: 0,
 	}
 
@@ -151,7 +155,7 @@ func breachRetributionTestCase(ht *lntest.HarnessTest,
 	// Assert that all the inputs of this transaction are spending outputs
 	// generated by Bob's breach transaction above.
 	for _, txIn := range justiceTx.TxIn {
-		require.Equal(ht, breachTXID, txIn.PreviousOutPoint.Hash,
+		require.Equal(ht, *breachTXID, txIn.PreviousOutPoint.Hash,
 			"justice tx not spending commitment utxo")
 	}
 
@@ -296,7 +300,7 @@ func revokedCloseRetributionZeroValueRemoteOutputCase(ht *lntest.HarnessTest,
 	// broadcasting her current channel state. This is actually the
 	// commitment transaction of a prior *revoked* state, so she'll soon
 	// feel the wrath of Dave's retribution.
-	stream, closeTxID := ht.CloseChannelAssertPending(
+	stream, closeUpdate := ht.CloseChannelAssertPending(
 		carol, chanPoint, true,
 	)
 
@@ -310,9 +314,11 @@ func revokedCloseRetributionZeroValueRemoteOutputCase(ht *lntest.HarnessTest,
 	// state and continues exacting justice after his node restarts.
 	ht.RestartNode(dave)
 
+	closeTxID := closeUpdate.GetClosePending().Txid
+
 	// The breachTXID should match the above closeTxID.
 	breachTXID := ht.WaitForChannelCloseEvent(stream)
-	require.EqualValues(ht, breachTXID, closeTxID)
+	require.EqualValues(ht, breachTXID[:], closeTxID)
 
 	// Construct to_local output which pays to Dave. Based on the output
 	// ordering, the first output in this breach tx is the to_local
@@ -543,9 +549,13 @@ func revokedCloseRetributionRemoteHodlCase(ht *lntest.HarnessTest,
 	// broadcasting her current channel state. This is actually the
 	// commitment transaction of a prior *revoked* state, so she'll soon
 	// feel the wrath of Dave's retribution.
-	closeUpdates, closeTxID := ht.CloseChannelAssertPending(
+	closeUpdates, closeUpd := ht.CloseChannelAssertPending(
 		carol, chanPoint, true,
 	)
+	pendingCloseUpd := closeUpd.GetClosePending()
+	require.NotNil(ht, pendingCloseUpd)
+	closeTxID, err := chainhash.NewHash(pendingCloseUpd.Txid)
+	require.NoError(ht, err)
 
 	// Generate a single block to mine the breach transaction.
 	block := ht.MineBlocksAndAssertNumTxes(1, 1)[0]
@@ -593,7 +603,7 @@ func revokedCloseRetributionRemoteHodlCase(ht *lntest.HarnessTest,
 		return nil, errNotFound
 	}
 
-	err := wait.NoError(func() error {
+	err = wait.NoError(func() error {
 		txid, err := findJusticeTx()
 		if err != nil {
 			return err

itest/lnd_sweep_test.go

@@ -5,6 +5,7 @@ import (
 	"time"
 
 	"github.com/btcsuite/btcd/btcutil"
+	"github.com/btcsuite/btcd/chaincfg/chainhash"
 	"github.com/btcsuite/btcd/wire"
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/fn/v2"
@@ -1963,8 +1964,8 @@ func testBumpForceCloseFee(ht *lntest.HarnessTest) {
 	ht.FundCoinsP2TR(btcutil.SatoshiPerBitcoin, alice)
 
 	// Alice force closes the channel which has no HTLCs at stake.
-	_, closingTxID := ht.CloseChannelAssertPending(alice, chanPoint, true)
-	require.NotNil(ht, closingTxID)
+	_, closeUpdates := ht.CloseChannelAssertPending(alice, chanPoint, true)
+	require.NotNil(ht, closeUpdates)
 
 	// Alice should see one waiting close channel.
 	ht.AssertNumWaitingClose(alice, 1)
@@ -1974,7 +1975,10 @@ func testBumpForceCloseFee(ht *lntest.HarnessTest) {
 	ht.AssertNumPendingSweeps(alice, 2)
 
 	// Calculate the commitment tx fee rate.
-	closingTx := ht.AssertTxInMempool(closingTxID)
+	pendingClose := closeUpdates.GetClosePending()
+	closeTxid, err := chainhash.NewHash(pendingClose.Txid)
+	require.NoError(ht, err)
+	closingTx := ht.AssertTxInMempool(*closeTxid)
 	require.NotNil(ht, closingTx)
 
 	// The default commitment fee for anchor channels is capped at 2500

itest/lnd_watchtower_test.go

@@ -491,7 +491,7 @@ func testRevokedCloseRetributionAltruistWatchtowerCase(ht *lntest.HarnessTest,
 	// broadcasting his current channel state. This is actually the
 	// commitment transaction of a prior *revoked* state, so he'll soon
 	// feel the wrath of Dave's retribution.
-	closeUpdates, closeTxID := ht.CloseChannelAssertPending(
+	closeUpdates, pendingClose := ht.CloseChannelAssertPending(
 		carol, chanPoint, true,
 	)
 
@@ -504,7 +504,8 @@ func testRevokedCloseRetributionAltruistWatchtowerCase(ht *lntest.HarnessTest,
 	ht.AssertTxInBlock(block, breachTXID)
 
 	// The breachTXID should match the above closeTxID.
-	require.EqualValues(ht, breachTXID, closeTxID)
+	closeTxID := pendingClose.GetClosePending().Txid
+	require.EqualValues(ht, breachTXID[:], closeTxID)
 
 	// Query the mempool for Dave's justice transaction, this should be
 	// broadcast as Carol's contract breaching transaction gets confirmed

lncfg/protocol.go

@@ -35,6 +35,10 @@ type ProtocolOptions struct {
 	// the experimental taproot overlay chan type.
 	TaprootOverlayChans bool `long:"simple-taproot-overlay-chans" description:"if set, then lnd will create and accept requests for channels using the taproot overlay commitment type"`
 
+	// RbfCoopClose should be set if we want to signal that we support for
+	// the new experimental RBF coop close feature.
+	RbfCoopClose bool `long:"rbf-coop-close" description:"if set, then lnd will signal that it supports the new RBF based coop close protocol"`
+
 	// NoAnchors should be set if we don't want to support opening or accepting
 	// channels having the anchor commitment type.
 	NoAnchors bool `long:"no-anchors" description:"disable support for anchor commitments"`

lncfg/protocol_integration.go

@@ -41,6 +41,10 @@ type ProtocolOptions struct {
 	// TODO(halseth): transition itests to anchors instead!
 	Anchors bool `long:"anchors" description:"enable support for anchor commitments"`
 
+	// RbfCoopClose should be set if we want to signal that we support for
+	// the new experimental RBF coop close feature.
+	RbfCoopClose bool `long:"rbf-coop-close" description:"if set, then lnd will signal that it supports the new RBF based coop close protocol"`
+
 	// ScriptEnforcedLease enables script enforced commitments for channel
 	// leases.
 	//

lnrpc/lightning.proto

@@ -2167,6 +2167,8 @@ message CloseStatusUpdate {
 message PendingUpdate {
     bytes txid = 1;
     uint32 output_index = 2;
+    int64 fee_per_vbyte = 3;
+    bool local_close_tx = 4;
 }
 
 message InstantUpdate {

lnrpc/lightning.swagger.json

@@ -6739,6 +6739,13 @@
         "output_index": {
           "type": "integer",
           "format": "int64"
+        },
+        "fee_per_vbyte": {
+          "type": "string",
+          "format": "int64"
+        },
+        "local_close_tx": {
+          "type": "boolean"
         }
       }
     },

lntest/harness.go

@@ -1208,14 +1208,79 @@ func (h *HarnessTest) OpenChannelAssertErr(srcNode, destNode *node.HarnessNode,
 		"error returned, want %v, got %v", expectedErr, err)
 }
 
+// closeChannelOpts holds the options for closing a channel.
+type closeChannelOpts struct {
+	feeRate fn.Option[chainfee.SatPerVByte]
+
+	// localTxOnly is a boolean indicating if we should only attempt to
+	// consume close pending notifications for the local transaction.
+	localTxOnly bool
+
+	// skipMempoolCheck is a boolean indicating if we should skip the normal
+	// mempool check after a coop close.
+	skipMempoolCheck bool
+
+	// errString is an expected error. If this is non-blank, then we'll
+	// assert that the coop close wasn't possible, and returns an error that
+	// contains this err string.
+	errString string
+}
+
+// CloseChanOpt is a functional option to modify the way we close a channel.
+type CloseChanOpt func(*closeChannelOpts)
+
+// WithCoopCloseFeeRate is a functional option to set the fee rate for a coop
+// close attempt.
+func WithCoopCloseFeeRate(rate chainfee.SatPerVByte) CloseChanOpt {
+	return func(o *closeChannelOpts) {
+		o.feeRate = fn.Some(rate)
+	}
+}
+
+// WithLocalTxNotify is a functional option to indicate that we should only
+// notify for the local txn. This is useful for the RBF coop close type, as
+// it'll notify for both local and remote txns.
+func WithLocalTxNotify() CloseChanOpt {
+	return func(o *closeChannelOpts) {
+		o.localTxOnly = true
+	}
+}
+
+// WithSkipMempoolCheck is a functional option to indicate that we should skip
+// the mempool check. This can be used when a coop close iteration may not
+// result in a newly broadcast transaction.
+func WithSkipMempoolCheck() CloseChanOpt {
+	return func(o *closeChannelOpts) {
+		o.skipMempoolCheck = true
+	}
+}
+
+// WithExpectedErrString is a functional option that can be used to assert that
+// an error occurs during the coop close process.
+func WithExpectedErrString(errString string) CloseChanOpt {
+	return func(o *closeChannelOpts) {
+		o.errString = errString
+	}
+}
+
+// defaultCloseOpts returns the set of default close options.
+func defaultCloseOpts() *closeChannelOpts {
+	return &closeChannelOpts{}
+}
+
 // CloseChannelAssertPending attempts to close the channel indicated by the
 // passed channel point, initiated by the passed node. Once the CloseChannel
 // rpc is called, it will consume one event and assert it's a close pending
 // event. In addition, it will check that the closing tx can be found in the
 // mempool.
 func (h *HarnessTest) CloseChannelAssertPending(hn *node.HarnessNode,
-	cp *lnrpc.ChannelPoint,
-	force bool) (rpc.CloseChanClient, chainhash.Hash) {
+	cp *lnrpc.ChannelPoint, force bool,
+	opts ...CloseChanOpt) (rpc.CloseChanClient, *lnrpc.CloseStatusUpdate) {
+
+	closeOpts := defaultCloseOpts()
+	for _, optFunc := range opts {
+		optFunc(closeOpts)
+	}
 
 	// Calls the rpc to close the channel.
 	closeReq := &lnrpc.CloseChannelRequest{
@@ -1224,10 +1289,9 @@ func (h *HarnessTest) CloseChannelAssertPending(hn *node.HarnessNode,
 		NoWait:       true,
 	}
 
-	// For coop close, we use a default confg target of 6.
-	if !force {
-		closeReq.TargetConf = 6
-	}
+	closeOpts.feeRate.WhenSome(func(feeRate chainfee.SatPerVByte) {
+		closeReq.SatPerVbyte = uint64(feeRate)
+	})
 
 	var (
 		stream rpc.CloseChanClient
@@ -1242,25 +1306,52 @@ func (h *HarnessTest) CloseChannelAssertPending(hn *node.HarnessNode,
 	_, err = h.ReceiveCloseChannelUpdate(stream)
 	require.NoError(h, err, "close channel update got error: %v", err)
 
-	event, err = h.ReceiveCloseChannelUpdate(stream)
-	if err != nil {
-		h.Logf("Test: %s, close channel got error: %v",
-			h.manager.currentTestCase, err)
+	var closeTxid *chainhash.Hash
+	for {
+		event, err = h.ReceiveCloseChannelUpdate(stream)
+		if err != nil {
+			h.Logf("Test: %s, close channel got error: %v",
+				h.manager.currentTestCase, err)
+		}
+		if err != nil && closeOpts.errString == "" {
+			require.NoError(h, err, "retry closing channel failed")
+		} else if err != nil && closeOpts.errString != "" {
+			require.ErrorContains(h, err, closeOpts.errString)
+			return nil, nil
+		}
+
+		pendingClose, ok := event.Update.(*lnrpc.CloseStatusUpdate_ClosePending) //nolint:ll
+		require.Truef(h, ok, "expected channel close "+
+			"update, instead got %v", pendingClose)
+
+		if !pendingClose.ClosePending.LocalCloseTx &&
+			closeOpts.localTxOnly {
+
+			continue
+		}
+
+		notifyRate := pendingClose.ClosePending.FeePerVbyte
+		if closeOpts.localTxOnly &&
+			notifyRate != int64(closeReq.SatPerVbyte) {
+
+			continue
+		}
+
+		closeTxid, err = chainhash.NewHash(
+			pendingClose.ClosePending.Txid,
+		)
+		require.NoErrorf(h, err, "unable to decode closeTxid: %v",
+			pendingClose.ClosePending.Txid)
+
+		break
 	}
-	require.NoError(h, err, "retry closing channel failed")
 
-	pendingClose, ok := event.Update.(*lnrpc.CloseStatusUpdate_ClosePending)
-	require.Truef(h, ok, "expected channel close update, instead got %v",
-		pendingClose)
+	if !closeOpts.skipMempoolCheck {
+		// Assert the closing tx is in the mempool.
+		h.miner.AssertTxInMempool(*closeTxid)
+	}
 
-	closeTxid, err := chainhash.NewHash(pendingClose.ClosePending.Txid)
-	require.NoErrorf(h, err, "unable to decode closeTxid: %v",
-		pendingClose.ClosePending.Txid)
-
-	// Assert the closing tx is in the mempool.
-	h.miner.AssertTxInMempool(*closeTxid)
-
-	return stream, *closeTxid
+	return stream, event
 }
 
 // CloseChannel attempts to coop close a non-anchored channel identified by the

lntest/harness_assertion.go

@@ -534,8 +534,8 @@ func (h HarnessTest) WaitForChannelCloseEvent(
 	require.NoError(h, err)
 
 	resp, ok := event.Update.(*lnrpc.CloseStatusUpdate_ChanClose)
-	require.Truef(h, ok, "expected channel open update, instead got %v",
-		resp)
+	require.Truef(h, ok, "expected channel close update, instead got %v",
+		event.Update)
 
 	txid, err := chainhash.NewHash(resp.ChanClose.ClosingTxid)
 	require.NoErrorf(h, err, "wrong format found in closing txid: %v",

lnwallet/chancloser/rbf_close.md

@@ -0,0 +1,219 @@
+# RBF Co-op Close State Machine
+
+## Abstract
+
+The Lightning Network Daemon (lnd) implements a cooperative channel closing
+mechanism that allows two connected peers to negotiate a mutually agreed-upon
+closing transaction. This document outlines the state machine that governs the
+cooperative closing process, defining the various states a channel progresses
+through from active operation to final closure.
+
+Cooperative closing is distinct from force closing in that it requires both
+channel participants to agree on the final channel state and closing
+transaction, resulting in lower fees and immediate fund availability compared to
+unilateral channel closures.
+
+## State Machine Overview
+
+The cooperative closing state machine manages the lifecycle of a channel from
+the moment a closing request is initiated until the closing transaction is
+confirmed on the blockchain. The state transitions ensure proper negotiation of
+closing fees, validation of signatures, and handling of protocol violations.
+
+### High-Level Flow
+
+1. An active channel receives a shutdown request (locally or remotely)
+2. Channel stops accepting new HTLCs and begins flushing existing ones
+3. Once flushed, nodes begin negotiating closing transaction fee
+4. Upon agreement, nodes sign and broadcast the transaction
+5. **RBF Iteration (optional)**: While waiting for confirmation, either node can
+   propose a fee increase via Replace-By-Fee (RBF), restarting the negotiation
+   process with higher fees
+6. Process completes when transaction confirms on-chain
+
+## States and Transitions
+```mermaid
+---
+title: Co-Op Close V2
+---
+stateDiagram-v2
+    state CoopCloseV2 {
+    [*] --> ChannelActive
+    ChannelActive --> ShutdownPending: send_shutdown
+    ChannelActive --> ShutdownPending: shutdown_received
+    ShutdownPending --> ChannelFlushing: shutdown_received
+    ShutdownPending --> ChannelFlushing: shutdown_complete
+    
+    ChannelFlushing --> ClosingNegotiation: channel_flushed
+    
+    state ClosingNegotiation {
+        
+        state LocalSide {
+            [*] --> LocalCloseStart
+            LocalCloseStart --> LocalOfferSent: send_offer
+            LocalOfferSent --> ClosePending: local_sig_received
+        }
+        
+        state RemoteSide {
+            [*] --> RemoteCloseStart
+            RemoteCloseStart --> ClosePending: offer_received
+        }
+        
+        CloseErr --> LocalCloseStart: send_offer_rbf
+        CloseErr --> RemoteCloseStart: offer_received_rbf
+        LocalCloseStart --> CloseErr: protocol_violation
+        RemoteCloseStart --> CloseErr: protocol_violation
+        
+        ClosePending --> LocalCloseStart: send_offer_rbf
+        ClosePending --> RemoteCloseStart: offer_received_rbf
+    }
+    
+    ClosingNegotiation --> CloseFin: txn_confirmation
+    }
+```
+
+### ChannelActive
+
+The initial state where the channel is fully operational.
+
+- **Transitions**:
+  - `send_shutdown` → `ShutdownPending` (Local node initiates closing process)
+  - `shutdown_received` → `ShutdownPending` (Remote node initiates closing process)
+
+### ShutdownPending
+
+The channel has entered the closing process but is still processing existing HTLCs.
+
+- **Transitions**:
+  - `shutdown_received` → `ChannelFlushing` (When both parties have exchanged
+  shutdown messages)
+
+  - `shutdown_complete` → `ChannelFlushing` (When local shutdown processing is
+  complete)
+
+### ChannelFlushing
+
+The channel no longer accepts new HTLCs and is waiting for existing HTLCs to
+resolve.
+
+- **Transitions**:
+  - `channel_flushed` → `ClosingNegotiation` (When all HTLCs are settled)
+
+### ClosingNegotiation
+This composite state encompasses multiple substates related to the negotiation
+
+of the closing transaction fee. It's divided into local and remote operation
+flows.
+
+#### LocalSide
+
+- **LocalCloseStart**: Ready to initiate or respond to closing negotiation from
+local perspective.
+  - **Transitions**:
+    - `send_offer` → `LocalOfferSent` (Local node proposes a closing fee)
+    - `protocol_violation` → `CloseErr` (Invalid message or state detected)
+
+- **LocalOfferSent**: Local node has sent a closing offer and is awaiting
+confirmation.
+  - **Transitions**:
+    - `local_sig_received` → `ClosePending` (Local signature validated and
+    accepted)
+
+#### RemoteSide
+
+- **RemoteCloseStart**: Ready to process closing negotiation initiated by remote
+  node.
+  - **Transitions**:
+    - `offer_received` → `ClosePending` (Remote node proposal received and
+    accepted)
+    - `protocol_violation` → `CloseErr` (Invalid message or state detected)
+
+#### Shared States
+
+- **ClosePending**: Closing transaction has been negotiated, signed by both
+  parties, and broadcast to the network. Waiting for on-chain confirmation.
+
+  - **Transitions**:
+    - `send_offer_rbf` → `LocalCloseStart` (Local node initiates fee increase
+    via RBF)
+
+    - `offer_received_rbf` → `RemoteCloseStart` (Remote node initiates fee
+    increase via RBF)
+
+- **CloseErr**: Error state for handling protocol violations.
+  - **Transitions**:
+    - `send_offer_rbf` → `LocalCloseStart` (Local node attempts recovery with
+    new offer)
+
+    - `offer_received_rbf` → `RemoteCloseStart` (Remote node attempts recovery
+    with new offer)
+
+### CloseFin
+
+The closing transaction has been confirmed on the blockchain, and the channel is
+considered closed.
+
+- **Transitions**: None (terminal state)
+
+## Fee Negotiation Process
+
+Fee negotiation is a critical component of the cooperative close process. The
+protocol supports Replace-By-Fee (RBF) to handle changing network fee
+conditions:
+
+1. Initial fee proposal is based on current network fee estimation
+2. Either party can propose higher fees using RBF if confirmation is taking too
+   long
+3. Nodes can alternate proposals until reaching agreement
+4. Each proposal must satisfy RBF requirements (incremental fee increase)
+
+## Protocol Violation Handling
+
+The `CloseErr` state provides recovery paths when protocol violations occur:
+
+- Invalid signature formats
+- Out-of-sequence messages
+- Timeout violations
+- Malformed closing transactions
+
+Recovery typically involves restarting the negotiation with a new closing offer.
+
+## Example Scenarios
+
+### Standard Cooperative Close
+
+1. Local node initiates closing: `ChannelActive` → `ShutdownPending` (via
+   `send_shutdown`)
+
+2. Remote acknowledges: `ShutdownPending` → `ChannelFlushing` (via
+   `shutdown_received`)
+
+3. HTLCs resolve: `ChannelFlushing` → `ClosingNegotiation` (via
+   `channel_flushed`)
+
+4. Local proposes fee: `LocalCloseStart` → `LocalOfferSent` (via `send_offer`)
+
+5. Local signature validated: `LocalOfferSent` → `ClosePending` (via
+   `local_sig_received`)
+
+6. Transaction confirms: `ClosePending` → `CloseFin` (via `txn_confirmation`)
+
+### Fee Bump Due to Network Congestion
+
+1. ... (steps 1-5 same as above)
+2. While in `ClosePending`, network fees increase
+
+3. Local node initiates RBF: `ClosePending` → `LocalCloseStart` (via
+   `send_offer_rbf`)
+
+4. New proposal cycle begins with higher fees
+
+5. When agreement is reached on new fees: `ClosePending` → `CloseFin` (via
+   `txn_confirmation`)
+
+## Implementation Notes
+
+- This state machine is implemented in the `peer.go` and `channel.go` files
+within the lnd codebase
+- State transitions are logged at the debug level
+- The `ChanCloser` interface manages the state machine execution

lnwallet/chancloser/rbf_coop_msg_mapper.go

@@ -1,8 +1,10 @@
 package chancloser
 
 import (
+	"github.com/btcsuite/btcd/btcec/v2"
 	"github.com/lightningnetwork/lnd/fn/v2"
 	"github.com/lightningnetwork/lnd/lnwire"
+	"github.com/lightningnetwork/lnd/msgmux"
 )
 
 // RbfMsgMapper is a struct that implements the MsgMapper interface for the
@@ -16,16 +18,21 @@ type RbfMsgMapper struct {
 
 	// chanID is the channel ID of the channel being closed.
 	chanID lnwire.ChannelID
+
+	// peerPub is the public key of the peer that the channel is being
+	// closed.
+	peerPub btcec.PublicKey
 }
 
 // NewRbfMsgMapper creates a new RbfMsgMapper instance given the current block
 // height when the co-op close request was initiated.
 func NewRbfMsgMapper(blockHeight uint32,
-	chanID lnwire.ChannelID) *RbfMsgMapper {
+	chanID lnwire.ChannelID, peerPub btcec.PublicKey) *RbfMsgMapper {
 
 	return &RbfMsgMapper{
 		blockHeight: blockHeight,
 		chanID:      chanID,
+		peerPub:     peerPub,
 	}
 }
 
@@ -34,18 +41,20 @@ func someEvent[T ProtocolEvent](m T) fn.Option[ProtocolEvent] {
 	return fn.Some(ProtocolEvent(m))
 }
 
-// isExpectedChanID returns true if the channel ID of the message matches the
+// isForUs returns true if the channel ID + pubkey of the message matches the
 // bound instance.
-func (r *RbfMsgMapper) isExpectedChanID(chanID lnwire.ChannelID) bool {
-	return r.chanID == chanID
+func (r *RbfMsgMapper) isForUs(chanID lnwire.ChannelID,
+	fromPub btcec.PublicKey) bool {
+
+	return r.chanID == chanID && r.peerPub.IsEqual(&fromPub)
 }
 
 // MapMsg maps a wire message into a FSM event. If the message is not mappable,
 // then an error is returned.
-func (r *RbfMsgMapper) MapMsg(wireMsg lnwire.Message) fn.Option[ProtocolEvent] {
-	switch msg := wireMsg.(type) {
+func (r *RbfMsgMapper) MapMsg(wireMsg msgmux.PeerMsg) fn.Option[ProtocolEvent] {
+	switch msg := wireMsg.Message.(type) {
 	case *lnwire.Shutdown:
-		if !r.isExpectedChanID(msg.ChannelID) {
+		if !r.isForUs(msg.ChannelID, wireMsg.PeerPub) {
 			return fn.None[ProtocolEvent]()
 		}
 
@@ -55,7 +64,7 @@ func (r *RbfMsgMapper) MapMsg(wireMsg lnwire.Message) fn.Option[ProtocolEvent] {
 		})
 
 	case *lnwire.ClosingComplete:
-		if !r.isExpectedChanID(msg.ChannelID) {
+		if !r.isForUs(msg.ChannelID, wireMsg.PeerPub) {
 			return fn.None[ProtocolEvent]()
 		}
 
@@ -64,7 +73,7 @@ func (r *RbfMsgMapper) MapMsg(wireMsg lnwire.Message) fn.Option[ProtocolEvent] {
 		})
 
 	case *lnwire.ClosingSig:
-		if !r.isExpectedChanID(msg.ChannelID) {
+		if !r.isForUs(msg.ChannelID, wireMsg.PeerPub) {
 			return fn.None[ProtocolEvent]()
 		}
 

lnwallet/chancloser/rbf_coop_states.go

@@ -49,6 +49,11 @@ var (
 	// ErrCloserAndClosee is returned when we expect a sig covering both
 	// outputs, it isn't present.
 	ErrCloserAndClosee = fmt.Errorf("expected CloserAndClosee sig")
+
+	// ErrWrongLocalScript is returned when the remote party sends a
+	// ClosingComplete message that doesn't carry our last local script
+	// sent.
+	ErrWrongLocalScript = fmt.Errorf("wrong local script")
 )
 
 // ProtocolEvent is a special interface used to create the equivalent of a
@@ -361,6 +366,9 @@ type ProtocolState interface {
 	// ProcessEvent takes a protocol event, and implements a state
 	// transition for the state.
 	ProcessEvent(ProtocolEvent, *Environment) (*CloseStateTransition, error)
+
+	// String returns the name of the state.
+	String() string
 }
 
 // AsymmetricPeerState is an extension of the normal ProtocolState interface
@@ -379,7 +387,7 @@ type AsymmetricPeerState interface {
 type ProtocolStates interface {
 	ChannelActive | ShutdownPending | ChannelFlushing | ClosingNegotiation |
 		LocalCloseStart | LocalOfferSent | RemoteCloseStart |
-		ClosePending | CloseFin
+		ClosePending | CloseFin | CloseErr
 }
 
 // ChannelActive is the base state for the channel closer state machine. In
@@ -401,6 +409,11 @@ type ProtocolStates interface {
 type ChannelActive struct {
 }
 
+// String returns the name of the state for ChannelActive.
+func (c *ChannelActive) String() string {
+	return "ChannelActive"
+}
+
 // IsTerminal returns true if the target state is a terminal state.
 func (c *ChannelActive) IsTerminal() bool {
 	return false
@@ -441,6 +454,16 @@ type ShutdownPending struct {
 	// IdealFeeRate is the ideal fee rate we'd like to use for the closing
 	// attempt.
 	IdealFeeRate fn.Option[chainfee.SatPerVByte]
+
+	// EarlyRemoteOffer is the offer we received from the remote party
+	// before we received their shutdown message. We'll stash it to process
+	// later.
+	EarlyRemoteOffer fn.Option[OfferReceivedEvent]
+}
+
+// String returns the name of the state for ShutdownPending.
+func (s *ShutdownPending) String() string {
+	return "ShutdownPending"
 }
 
 // IsTerminal returns true if the target state is a terminal state.
@@ -478,6 +501,11 @@ type ChannelFlushing struct {
 	IdealFeeRate fn.Option[chainfee.SatPerVByte]
 }
 
+// String returns the name of the state for ChannelFlushing.
+func (c *ChannelFlushing) String() string {
+	return "ChannelFlushing"
+}
+
 // protocolStateSealed indicates that this struct is a ProtocolEvent instance.
 func (c *ChannelFlushing) protocolStateSealed() {}
 
@@ -505,6 +533,22 @@ type ClosingNegotiation struct {
 	// the ShouldRouteTo method to determine which state route incoming
 	// events to.
 	PeerState lntypes.Dual[AsymmetricPeerState]
+
+	// CloseChannelTerms is the terms we'll use to close the channel. We
+	// hold a value here which is pointed to by the various
+	// AsymmetricPeerState instances. This allows us to update this value if
+	// the remote peer sends a new address, with each of the state noting
+	// the new value via a pointer.
+	*CloseChannelTerms
+}
+
+// String returns the name of the state for ClosingNegotiation.
+func (c *ClosingNegotiation) String() string {
+	localState := c.PeerState.GetForParty(lntypes.Local)
+	remoteState := c.PeerState.GetForParty(lntypes.Remote)
+
+	return fmt.Sprintf("ClosingNegotiation(local=%v, remote=%v)",
+		localState, remoteState)
 }
 
 // IsTerminal returns true if the target state is a terminal state.
@@ -515,6 +559,56 @@ func (c *ClosingNegotiation) IsTerminal() bool {
 // protocolSealed indicates that this struct is a ProtocolEvent instance.
 func (c *ClosingNegotiation) protocolStateSealed() {}
 
+// ErrState can be used to introspect into a benign error related to a state
+// transition.
+type ErrState interface {
+	sealed()
+
+	error
+
+	// Err returns an error for the ErrState.
+	Err() error
+}
+
+// ErrStateCantPayForFee is sent when the local party attempts a fee update
+// that they can't actually party for.
+type ErrStateCantPayForFee struct {
+	localBalance btcutil.Amount
+
+	attemptedFee btcutil.Amount
+}
+
+// NewErrStateCantPayForFee returns a new NewErrStateCantPayForFee error.
+func NewErrStateCantPayForFee(localBalance, attemptedFee btcutil.Amount,
+) *ErrStateCantPayForFee {
+
+	return &ErrStateCantPayForFee{
+		localBalance: localBalance,
+		attemptedFee: attemptedFee,
+	}
+}
+
+// sealed makes this a sealed interface.
+func (e *ErrStateCantPayForFee) sealed() {
+}
+
+// Err returns an error for the ErrState.
+func (e *ErrStateCantPayForFee) Err() error {
+	return fmt.Errorf("cannot pay for fee of %v, only have %v local "+
+		"balance", e.attemptedFee, e.localBalance)
+}
+
+// Error returns the error string for the ErrState.
+func (e *ErrStateCantPayForFee) Error() string {
+	return e.Err().Error()
+}
+
+// String returns the string for the ErrStateCantPayForFee.
+func (e *ErrStateCantPayForFee) String() string {
+	return fmt.Sprintf("ErrStateCantPayForFee(local_balance=%v, "+
+		"attempted_fee=%v)", e.localBalance, e.attemptedFee)
+}
+
 // CloseChannelTerms is a set of terms that we'll use to close the channel. This
 // includes the balances of the channel, and the scripts we'll use to send each
 // party's funds to.
@@ -526,11 +620,11 @@ type CloseChannelTerms struct {
 
 // DeriveCloseTxOuts takes the close terms, and returns the local and remote tx
 // out for the close transaction. If an output is dust, then it'll be nil.
-//
-// TODO(roasbeef): add func for w/e heuristic to not manifest own output?
 func (c *CloseChannelTerms) DeriveCloseTxOuts() (*wire.TxOut, *wire.TxOut) {
 	//nolint:ll
 	deriveTxOut := func(balance btcutil.Amount, pkScript []byte) *wire.TxOut {
+		// We'll base the existence of the output on our normal dust
+		// check.
 		dustLimit := lnwallet.DustLimitForSize(len(pkScript))
 		if balance >= dustLimit {
 			return &wire.TxOut{
@@ -591,7 +685,13 @@ func (c *CloseChannelTerms) RemoteCanPayFees(absoluteFee btcutil.Amount) bool {
 // input events:
 //   - SendOfferEvent
 type LocalCloseStart struct {
-	CloseChannelTerms
+	*CloseChannelTerms
+}
+
+// String returns the name of the state for LocalCloseStart, including proposed
+// fee details.
+func (l *LocalCloseStart) String() string {
+	return "LocalCloseStart"
 }
 
 // ShouldRouteTo returns true if the target state should process the target
@@ -625,15 +725,23 @@ func (l *LocalCloseStart) protocolStateSealed() {}
 // input events:
 //   - LocalSigReceived
 type LocalOfferSent struct {
-	CloseChannelTerms
+	*CloseChannelTerms
 
 	// ProposedFee is the fee we proposed to the remote party.
 	ProposedFee btcutil.Amount
 
+	// ProposedFeeRate is the fee rate we proposed to the remote party.
+	ProposedFeeRate chainfee.SatPerVByte
+
 	// LocalSig is the signature we sent to the remote party.
 	LocalSig lnwire.Sig
 }
 
+// String returns the name of the state for LocalOfferSent, including proposed.
+func (l *LocalOfferSent) String() string {
+	return fmt.Sprintf("LocalOfferSent(proposed_fee=%v)", l.ProposedFee)
+}
+
 // ShouldRouteTo returns true if the target state should process the target
 // event.
 func (l *LocalOfferSent) ShouldRouteTo(event ProtocolEvent) bool {
@@ -668,6 +776,27 @@ func (l *LocalOfferSent) IsTerminal() bool {
 type ClosePending struct {
 	// CloseTx is the pending close transaction.
 	CloseTx *wire.MsgTx
+
+	*CloseChannelTerms
+
+	// FeeRate is the fee rate of the closing transaction.
+	FeeRate chainfee.SatPerVByte
+
+	// Party indicates which party is at this state. This is used to
+	// implement the state transition properly, based on ShouldRouteTo.
+	Party lntypes.ChannelParty
+}
+
+// String returns the name of the state for ClosePending.
+func (c *ClosePending) String() string {
+	return fmt.Sprintf("ClosePending(txid=%v, party=%v, fee_rate=%v)",
+		c.CloseTx.TxHash(), c.Party, c.FeeRate)
+}
+
+// isType returns true if the value is of type T.
+func isType[T any](value any) bool {
+	_, ok := value.(T)
+	return ok
 }
 
 // ShouldRouteTo returns true if the target state should process the target
@@ -677,6 +806,17 @@ func (c *ClosePending) ShouldRouteTo(event ProtocolEvent) bool {
 	case *SpendEvent:
 		return true
 	default:
+		switch {
+		case c.Party == lntypes.Local && isType[*SendOfferEvent](event):
+			return true
+
+		case c.Party == lntypes.Remote && isType[*OfferReceivedEvent](
+			event,
+		):
+
+			return true
+		}
+
 		return false
 	}
 }
@@ -696,6 +836,11 @@ type CloseFin struct {
 	ConfirmedTx *wire.MsgTx
 }
 
+// String returns the name of the state for CloseFin.
+func (c *CloseFin) String() string {
+	return "CloseFin"
+}
+
 // protocolStateSealed indicates that this struct is a ProtocolEvent instance.
 func (c *CloseFin) protocolStateSealed() {}
 
@@ -711,7 +856,12 @@ func (c *CloseFin) IsTerminal() bool {
 //   - fromState: ChannelFlushing
 //   - toState: ClosePending
 type RemoteCloseStart struct {
-	CloseChannelTerms
+	*CloseChannelTerms
+}
+
+// String returns the name of the state for RemoteCloseStart.
+func (r *RemoteCloseStart) String() string {
+	return "RemoteCloseStart"
 }
 
 // ShouldRouteTo returns true if the target state should process the target
@@ -733,6 +883,54 @@ func (l *RemoteCloseStart) IsTerminal() bool {
 	return false
 }
 
+// CloseErr is an error state in the protocol. We enter this state when a
+// protocol constraint is violated, or an upfront sanity check fails.
+type CloseErr struct {
+	ErrState
+
+	*CloseChannelTerms
+
+	// Party indicates which party is at this state. This is used to
+	// implement the state transition properly, based on ShouldRouteTo.
+	Party lntypes.ChannelParty
+}
+
+// String returns the name of the state for CloseErr, including error and party
+// details.
+func (c *CloseErr) String() string {
+	return fmt.Sprintf("CloseErr(party=%v, err=%v)", c.Party, c.ErrState)
+}
+
+// ShouldRouteTo returns true if the target state should process the target
+// event.
+func (c *CloseErr) ShouldRouteTo(event ProtocolEvent) bool {
+	switch event.(type) {
+	case *SpendEvent:
+		return true
+	default:
+		switch {
+		case c.Party == lntypes.Local && isType[*SendOfferEvent](event):
+			return true
+
+		case c.Party == lntypes.Remote && isType[*OfferReceivedEvent](
+			event,
+		):
+
+			return true
+		}
+
+		return false
+	}
+}
+
+// protocolStateSealed indicates that this struct is a ProtocolEvent instance.
+func (c *CloseErr) protocolStateSealed() {}
+
+// IsTerminal returns true if the target state is a terminal state.
+func (c *CloseErr) IsTerminal() bool {
+	return true
+}
+
 // RbfChanCloser is a state machine that handles the RBF-enabled cooperative
 // channel close protocol.
 type RbfChanCloser = protofsm.StateMachine[ProtocolEvent, *Environment]
@@ -761,3 +959,7 @@ type RbfState = protofsm.State[ProtocolEvent, *Environment]
 
 // RbfEvent is a type alias for the event type of the RBF channel closer.
 type RbfEvent = protofsm.EmittedEvent[ProtocolEvent]
+
+// RbfStateSub is a type alias for the state subscription type of the RBF chan
+// closer.
+type RbfStateSub = protofsm.StateSubscriber[ProtocolEvent, *Environment]

lnwallet/chancloser/rbf_coop_test.go

@@ -110,7 +110,10 @@ func assertStateTransitions[Event any, Env protofsm.Environment](
 	t.Helper()
 
 	for _, expectedState := range expectedStates {
-		newState := <-stateSub.NewItemCreated.ChanOut()
+		newState, err := fn.RecvOrTimeout(
+			stateSub.NewItemCreated.ChanOut(), 10*time.Millisecond,
+		)
+		require.NoError(t, err, "expected state: %T", expectedState)
 
 		require.IsType(t, expectedState, newState)
 	}
@@ -154,6 +157,27 @@ func assertUnknownEventFail(t *testing.T, startingState ProtocolState) {
 	})
 }
 
+// assertSpendEventCloseFin asserts that the state machine transitions to the
+// CloseFin state when a spend event is received.
+func assertSpendEventCloseFin(t *testing.T, startingState ProtocolState) {
+	t.Helper()
+
+	// If a spend event is received, the state machine should transition to
+	// the CloseFin state.
+	t.Run("spend_event", func(t *testing.T) {
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState: fn.Some(startingState),
+		})
+		defer closeHarness.stopAndAssert()
+
+		closeHarness.chanCloser.SendEvent(
+			context.Background(), &SpendEvent{},
+		)
+
+		closeHarness.assertStateTransitions(&CloseFin{})
+	})
+}
+
 type harnessCfg struct {
 	initialState fn.Option[ProtocolState]
 
@@ -248,6 +272,8 @@ func (r *rbfCloserTestHarness) assertNoStateTransitions() {
 }
 
 func (r *rbfCloserTestHarness) assertStateTransitions(states ...RbfState) {
+	r.T.Helper()
+
 	assertStateTransitions(r.T, r.stateSub, states)
 }
 
@@ -598,6 +624,8 @@ func (r *rbfCloserTestHarness) assertSingleRbfIteration(
 	// response of the remote party, which completes one iteration
 	localSigEvent := &LocalSigReceived{
 		SigMsg: lnwire.ClosingSig{
+			CloserScript: localAddr,
+			CloseeScript: remoteAddr,
 			ClosingSigs: lnwire.ClosingSigs{
 				CloserAndClosee: newSigTlv[tlv.TlvType3](
 					remoteWireSig,
@@ -620,34 +648,34 @@ func (r *rbfCloserTestHarness) assertSingleRbfIteration(
 }
 
 func (r *rbfCloserTestHarness) assertSingleRemoteRbfIteration(
-	initEvent ProtocolEvent, balanceAfterClose, absoluteFee btcutil.Amount,
-	sequence uint32, iteration bool) {
+	initEvent *OfferReceivedEvent, balanceAfterClose,
+	absoluteFee btcutil.Amount, sequence uint32, iteration bool,
+	sendInit bool) {
 
 	ctx := context.Background()
 
-	// If this is an iteration, then we expect some intermediate states,
-	// before we enter the main RBF/sign loop.
-	if iteration {
-		r.expectFeeEstimate(absoluteFee, 1)
-
-		r.assertStateTransitions(
-			&ChannelActive{}, &ShutdownPending{},
-			&ChannelFlushing{}, &ClosingNegotiation{},
-		)
-	}
-
 	// When we receive the signature below, our local state machine should
 	// move to finalize the close.
 	r.expectRemoteCloseFinalized(
-		&localSig, &remoteSig, localAddr, remoteAddr,
+		&localSig, &remoteSig, initEvent.SigMsg.CloseeScript,
+		initEvent.SigMsg.CloserScript,
 		absoluteFee, balanceAfterClose, false,
 	)
 
-	r.chanCloser.SendEvent(ctx, initEvent)
+	if sendInit {
+		r.chanCloser.SendEvent(ctx, initEvent)
+	}
 
 	// Our outer state should transition to ClosingNegotiation state.
 	r.assertStateTransitions(&ClosingNegotiation{})
 
+	// If this is an iteration, then we'll go from ClosePending ->
+	// RemoteCloseStart -> ClosePending. So we'll assert an extra transition
+	// here.
+	if iteration {
+		r.assertStateTransitions(&ClosingNegotiation{})
+	}
+
 	// If we examine the final resting state, we should see that the we're
 	// now in the ClosePending state for the remote peer.
 	currentState := assertStateT[*ClosingNegotiation](r)
@@ -687,7 +715,7 @@ func newRbfCloserTestHarness(t *testing.T,
 
 	peerPub := randPubKey(t)
 
-	msgMapper := NewRbfMsgMapper(uint32(startingHeight), chanID)
+	msgMapper := NewRbfMsgMapper(uint32(startingHeight), chanID, *peerPub)
 
 	initialState := cfg.initialState.UnwrapOr(&ChannelActive{})
 
@@ -858,7 +886,28 @@ func TestRbfChannelActiveTransitions(t *testing.T) {
 		closeHarness.waitForMsgSent()
 	})
 
-	// TODO(roasbeef): thaw height fail
+	// If the remote party attempts to close, and a thaw height is active,
+	// but not yet met, then we should fail.
+	t.Run("remote_initiated_thaw_height_close_fail", func(t *testing.T) {
+		closeHarness := newCloser(t, &harnessCfg{
+			localUpfrontAddr: fn.Some(localAddr),
+			thawHeight:       fn.Some(uint32(100000)),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// Next, we'll emit the recv event, with the addr of the remote
+		// party.
+		closeHarness.chanCloser.SendEvent(
+			ctx, &ShutdownReceived{
+				ShutdownScript: remoteAddr,
+				BlockHeight:    1,
+			},
+		)
+
+		// We expect a failure as the block height is less than the
+		// start height.
+		closeHarness.expectFailure(ErrThawHeightNotReached)
+	})
 
 	// When we receive a shutdown, we should transition to the shutdown
 	// pending state, with the local+remote shutdown addrs known.
@@ -902,6 +951,9 @@ func TestRbfChannelActiveTransitions(t *testing.T) {
 
 	// Any other event should be ignored.
 	assertUnknownEventFail(t, &ChannelActive{})
+
+	// Sending a Spend event should transition to CloseFin.
+	assertSpendEventCloseFin(t, &ChannelActive{})
 }
 
 // TestRbfShutdownPendingTransitions tests the transitions of the RBF closer
@@ -1033,8 +1085,106 @@ func TestRbfShutdownPendingTransitions(t *testing.T) {
 		closeHarness.assertStateTransitions(&ChannelFlushing{})
 	})
 
+	// If we an early offer from the remote party, then we should stash
+	// that, transition to the channel flushing state. Once there, another
+	// self transition should emit the stashed offer.
+	t.Run("early_remote_offer_shutdown_complete", func(t *testing.T) {
+		firstState := *startingState
+		firstState.IdealFeeRate = fn.Some(
+			chainfee.FeePerKwFloor.FeePerVByte(),
+		)
+		firstState.ShutdownScripts = ShutdownScripts{
+			LocalDeliveryScript:  localAddr,
+			RemoteDeliveryScript: remoteAddr,
+		}
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState: fn.Some[ProtocolState](
+				&firstState,
+			),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// In this case we're doing the shutdown dance for the first
+		// time, so we'll mark the channel as not being flushed.
+		closeHarness.expectFinalBalances(fn.None[ShutdownBalances]())
+
+		// Before we send the shutdown complete event, we'll send in an
+		// early offer from the remote party.
+		closeHarness.chanCloser.SendEvent(ctx, &OfferReceivedEvent{})
+
+		// This will cause a self transition back to ShutdownPending.
+		closeHarness.assertStateTransitions(&ShutdownPending{})
+
+		// Next, we'll send in a shutdown complete event.
+		closeHarness.chanCloser.SendEvent(ctx, &ShutdownComplete{})
+
+		// We should transition to the channel flushing state, then the
+		// self event to have this state cache he early offer should
+		// follow.
+		closeHarness.assertStateTransitions(
+			&ChannelFlushing{}, &ChannelFlushing{},
+		)
+
+		// If we get the current state, we should see that the offer is
+		// cached.
+		currentState := assertStateT[*ChannelFlushing](closeHarness)
+		require.NotNil(t, currentState.EarlyRemoteOffer)
+	})
+
+	// If we an early offer from the remote party, then we should stash
+	// that, transition to the channel flushing state. Once there, another
+	// self transition should emit the stashed offer.
+	t.Run("early_remote_offer_shutdown_received", func(t *testing.T) {
+		firstState := *startingState
+		firstState.IdealFeeRate = fn.Some(
+			chainfee.FeePerKwFloor.FeePerVByte(),
+		)
+		firstState.ShutdownScripts = ShutdownScripts{
+			LocalDeliveryScript:  localAddr,
+			RemoteDeliveryScript: remoteAddr,
+		}
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState: fn.Some[ProtocolState](
+				&firstState,
+			),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// In this case we're doing the shutdown dance for the first
+		// time, so we'll mark the channel as not being flushed.
+		closeHarness.expectFinalBalances(fn.None[ShutdownBalances]())
+		closeHarness.expectIncomingAddsDisabled()
+
+		// Before we send the shutdown complete event, we'll send in an
+		// early offer from the remote party.
+		closeHarness.chanCloser.SendEvent(ctx, &OfferReceivedEvent{})
+
+		// This will cause a self transition back to ShutdownPending.
+		closeHarness.assertStateTransitions(&ShutdownPending{})
+
+		// Next, we'll send in a shutdown complete event.
+		closeHarness.chanCloser.SendEvent(ctx, &ShutdownReceived{})
+
+		// We should transition to the channel flushing state, then the
+		// self event to have this state cache he early offer should
+		// follow.
+		closeHarness.assertStateTransitions(
+			&ChannelFlushing{}, &ChannelFlushing{},
+		)
+
+		// If we get the current state, we should see that the offer is
+		// cached.
+		currentState := assertStateT[*ChannelFlushing](closeHarness)
+		require.NotNil(t, currentState.EarlyRemoteOffer)
+	})
+
 	// Any other event should be ignored.
 	assertUnknownEventFail(t, startingState)
+
+	// Sending a Spend event should transition to CloseFin.
+	assertSpendEventCloseFin(t, startingState)
 }
 
 // TestRbfChannelFlushingTransitions tests the transitions of the RBF closer
@@ -1142,7 +1292,7 @@ func TestRbfChannelFlushingTransitions(t *testing.T) {
 				closeHarness.expectChanPendingClose()
 			}
 
-			// From where, we expect the state transition to go
+			// From here, we expect the state transition to go
 			// back to closing negotiated, for a ClosingComplete
 			// message to be sent and then for us to terminate at
 			// that state. This is 1/2 of the normal RBF signer
@@ -1154,8 +1304,65 @@ func TestRbfChannelFlushingTransitions(t *testing.T) {
 		})
 	}
 
+	// This tests that if we receive an `OfferReceivedEvent` while in the
+	// flushing state, then we'll cache that, and once we receive
+	// ChannelFlushed, we'll emit an internal `OfferReceivedEvent` in the
+	// negotiation state.
+	t.Run("early_offer", func(t *testing.T) {
+		firstState := *startingState
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState: fn.Some[ProtocolState](
+				&firstState,
+			),
+		})
+		defer closeHarness.stopAndAssert()
+
+		flushEvent := *flushTemplate
+
+		// Set up the fee estimate s.t the local party doesn't have
+		// balance to close.
+		closeHarness.expectFeeEstimate(absoluteFee, 1)
+
+		// First, we'll emit an `OfferReceivedEvent` to simulate an
+		// early offer (async network, they determine the channel is
+		// "flushed" before we do, and send their offer over).
+		remoteOffer := &OfferReceivedEvent{
+			SigMsg: lnwire.ClosingComplete{
+				FeeSatoshis:  absoluteFee,
+				CloserScript: remoteAddr,
+				CloseeScript: localAddr,
+				ClosingSigs: lnwire.ClosingSigs{
+					CloserAndClosee: newSigTlv[tlv.TlvType3]( //nolint:ll
+						remoteWireSig,
+					),
+				},
+			},
+		}
+
+		closeHarness.chanCloser.SendEvent(ctx, remoteOffer)
+
+		// We should do a self transition, and still be in the
+		// ChannelFlushing state.
+		closeHarness.assertStateTransitions(&ChannelFlushing{})
+
+		sequence := uint32(mempool.MaxRBFSequence)
+
+		// Now we'll send in the channel flushed event, and assert that
+		// this triggers a remote RBF iteration (we process their early
+		// offer and send our sig).
+		closeHarness.chanCloser.SendEvent(ctx, &flushEvent)
+		closeHarness.assertSingleRemoteRbfIteration(
+			remoteOffer, absoluteFee, absoluteFee, sequence, false,
+			true,
+		)
+	})
+
 	// Any other event should be ignored.
 	assertUnknownEventFail(t, startingState)
+
+	// Sending a Spend event should transition to CloseFin.
+	assertSpendEventCloseFin(t, startingState)
 }
 
 // TestRbfCloseClosingNegotiationLocal tests the local portion of the primary
@@ -1184,9 +1391,10 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 	startingState := &ClosingNegotiation{
 		PeerState: lntypes.Dual[AsymmetricPeerState]{
 			Local: &LocalCloseStart{
-				CloseChannelTerms: *closeTerms,
+				CloseChannelTerms: closeTerms,
 			},
 		},
+		CloseChannelTerms: closeTerms,
 	}
 
 	sendOfferEvent := &SendOfferEvent{
@@ -1195,6 +1403,8 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 
 	balanceAfterClose := localBalance.ToSatoshis() - absoluteFee
 
+	// TODO(roasbeef): add test case for error state validation, then resume
+
 	// In this state, we'll simulate deciding that we need to send a new
 	// offer to the remote party.
 	t.Run("send_offer_iteration_no_dust", func(t *testing.T) {
@@ -1231,6 +1441,8 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 		// we'll specify 2 signature fields.
 		localSigEvent := &LocalSigReceived{
 			SigMsg: lnwire.ClosingSig{
+				CloserScript: localAddr,
+				CloseeScript: remoteAddr,
 				ClosingSigs: lnwire.ClosingSigs{
 					CloserNoClosee: newSigTlv[tlv.TlvType1](
 						remoteWireSig,
@@ -1261,9 +1473,10 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 		firstState := &ClosingNegotiation{
 			PeerState: lntypes.Dual[AsymmetricPeerState]{
 				Local: &LocalCloseStart{
-					CloseChannelTerms: newCloseTerms,
+					CloseChannelTerms: &newCloseTerms,
 				},
 			},
+			CloseChannelTerms: &newCloseTerms,
 		}
 
 		closeHarness := newCloser(t, &harnessCfg{
@@ -1286,9 +1499,10 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 		firstState := &ClosingNegotiation{
 			PeerState: lntypes.Dual[AsymmetricPeerState]{
 				Local: &LocalCloseStart{
-					CloseChannelTerms: *closeTerms,
+					CloseChannelTerms: closeTerms,
 				},
 			},
+			CloseChannelTerms: closeTerms,
 		}
 
 		closeHarness := newCloser(t, &harnessCfg{
@@ -1306,15 +1520,55 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 		)
 	})
 
+	// In this test, we'll assert that we're able to restart the RBF loop
+	// to trigger additional signature iterations.
+	t.Run("send_offer_rbf_wrong_local_script", func(t *testing.T) {
+		firstState := &ClosingNegotiation{
+			PeerState: lntypes.Dual[AsymmetricPeerState]{
+				Local: &LocalCloseStart{
+					CloseChannelTerms: closeTerms,
+				},
+			},
+			CloseChannelTerms: closeTerms,
+		}
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState:     fn.Some[ProtocolState](firstState),
+			localUpfrontAddr: fn.Some(localAddr),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// The remote party will send a ClosingSig message, but with the
+		// wrong local script. We should expect an error.
+		closeHarness.expectFailure(ErrWrongLocalScript)
+
+		// We'll send this message in directly, as we shouldn't get any
+		// further in the process.
+		// assuming we start in this negotiation state.
+		localSigEvent := &LocalSigReceived{
+			SigMsg: lnwire.ClosingSig{
+				CloserScript: remoteAddr,
+				CloseeScript: remoteAddr,
+				ClosingSigs: lnwire.ClosingSigs{
+					CloserAndClosee: newSigTlv[tlv.TlvType3]( //nolint:ll
+						remoteWireSig,
+					),
+				},
+			},
+		}
+		closeHarness.chanCloser.SendEvent(ctx, localSigEvent)
+	})
+
 	// In this test, we'll assert that we're able to restart the RBF loop
 	// to trigger additional signature iterations.
 	t.Run("send_offer_rbf_iteration_loop", func(t *testing.T) {
 		firstState := &ClosingNegotiation{
 			PeerState: lntypes.Dual[AsymmetricPeerState]{
 				Local: &LocalCloseStart{
-					CloseChannelTerms: *closeTerms,
+					CloseChannelTerms: closeTerms,
 				},
 			},
+			CloseChannelTerms: closeTerms,
 		}
 
 		closeHarness := newCloser(t, &harnessCfg{
@@ -1330,44 +1584,18 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 			noDustExpect,
 		)
 
-		// Next, we'll send in a new SendShutdown event which simulates
-		// the user requesting a RBF fee bump. We'll use 10x the fee we
-		// used in the last iteration.
+		// Next, we'll send in a new SendOfferEvent event which
+		// simulates the user requesting a RBF fee bump. We'll use 10x
+		// the fee we used in the last iteration.
 		rbfFeeBump := chainfee.FeePerKwFloor.FeePerVByte() * 10
-		sendShutdown := &SendShutdown{
-			IdealFeeRate: rbfFeeBump,
+		localOffer := &SendOfferEvent{
+			TargetFeeRate: rbfFeeBump,
 		}
 
-		// We should send shutdown as normal, but skip some other
-		// checks as we know the close is in progress.
-		closeHarness.expectShutdownEvents(shutdownExpect{
-			allowSend:     true,
-			finalBalances: fn.Some(closeTerms.ShutdownBalances),
-			recvShutdown:  true,
-		})
-		closeHarness.expectMsgSent(
-			singleMsgMatcher[*lnwire.Shutdown](nil),
-		)
-
-		closeHarness.chanCloser.SendEvent(ctx, sendShutdown)
-
-		// We should first transition to the Channel Active state
-		// momentarily, before transitioning to the shutdown pending
-		// state.
-		closeHarness.assertStateTransitions(
-			&ChannelActive{}, &ShutdownPending{},
-		)
-
-		// Next, we'll send in the shutdown received event, which
-		// should transition us to the channel flushing state.
-		shutdownEvent := &ShutdownReceived{
-			ShutdownScript: remoteAddr,
-		}
-
-		// Now we expect that aanother full RBF iteration takes place
-		// (we initiatea a new local sig).
+		// Now we expect that another full RBF iteration takes place (we
+		// initiate a new local sig).
 		closeHarness.assertSingleRbfIteration(
-			shutdownEvent, balanceAfterClose, absoluteFee,
+			localOffer, balanceAfterClose, absoluteFee,
 			noDustExpect,
 		)
 
@@ -1376,6 +1604,59 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 			&ClosingNegotiation{},
 		)
 	})
+
+	// Make sure that we'll go to the error state if we try to try a close
+	// that we can't pay for.
+	t.Run("send_offer_cannot_pay_for_fees", func(t *testing.T) {
+		firstState := &ClosingNegotiation{
+			PeerState: lntypes.Dual[AsymmetricPeerState]{
+				Local: &LocalCloseStart{
+					CloseChannelTerms: closeTerms,
+				},
+			},
+			CloseChannelTerms: closeTerms,
+		}
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState:     fn.Some[ProtocolState](firstState),
+			localUpfrontAddr: fn.Some(localAddr),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// We'll prep to return an absolute fee that's much higher than
+		// the amount we have in the channel.
+		closeHarness.expectFeeEstimate(btcutil.SatoshiPerBitcoin, 1)
+
+		rbfFeeBump := chainfee.FeePerKwFloor.FeePerVByte()
+		localOffer := &SendOfferEvent{
+			TargetFeeRate: rbfFeeBump,
+		}
+
+		// Next, we'll send in this event, which should fail as we can't
+		// actually pay for fees.
+		closeHarness.chanCloser.SendEvent(ctx, localOffer)
+
+		// We should transition to the CloseErr (within
+		// ClosingNegotiation) state.
+		closeHarness.assertStateTransitions(&ClosingNegotiation{})
+
+		// If we get the state, we should see the expected ErrState.
+		currentState := assertStateT[*ClosingNegotiation](closeHarness)
+
+		closeErrState, ok := currentState.PeerState.GetForParty(
+			lntypes.Local,
+		).(*CloseErr)
+		require.True(t, ok)
+		require.IsType(
+			t, &ErrStateCantPayForFee{}, closeErrState.ErrState,
+		)
+	})
+
+	// Any other event should be ignored.
+	assertUnknownEventFail(t, startingState)
+
+	// Sending a Spend event should transition to CloseFin.
+	assertSpendEventCloseFin(t, startingState)
 }
 
 // TestRbfCloseClosingNegotiationRemote tests that state machine is able to
@@ -1383,6 +1664,7 @@ func TestRbfCloseClosingNegotiationLocal(t *testing.T) {
 // party.
 func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 	t.Parallel()
+
 	ctx := context.Background()
 
 	localBalance := lnwire.NewMSatFromSatoshis(40_000)
@@ -1403,16 +1685,16 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 	startingState := &ClosingNegotiation{
 		PeerState: lntypes.Dual[AsymmetricPeerState]{
 			Local: &LocalCloseStart{
-				CloseChannelTerms: *closeTerms,
+				CloseChannelTerms: closeTerms,
 			},
 			Remote: &RemoteCloseStart{
-				CloseChannelTerms: *closeTerms,
+				CloseChannelTerms: closeTerms,
 			},
 		},
+		CloseChannelTerms: closeTerms,
 	}
 
 	balanceAfterClose := remoteBalance.ToSatoshis() - absoluteFee
-
 	sequence := uint32(mempool.MaxRBFSequence)
 
 	// This case tests that if we receive a signature from the remote
@@ -1430,7 +1712,9 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 		// be higher than the remote party's balance.
 		feeOffer := &OfferReceivedEvent{
 			SigMsg: lnwire.ClosingComplete{
-				FeeSatoshis: absoluteFee * 10,
+				CloserScript: remoteAddr,
+				CloseeScript: localAddr,
+				FeeSatoshis:  absoluteFee * 10,
 			},
 		}
 		closeHarness.chanCloser.SendEvent(ctx, feeOffer)
@@ -1449,12 +1733,13 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 		firstState := &ClosingNegotiation{
 			PeerState: lntypes.Dual[AsymmetricPeerState]{
 				Local: &LocalCloseStart{
-					CloseChannelTerms: closingTerms,
+					CloseChannelTerms: &closingTerms,
 				},
 				Remote: &RemoteCloseStart{
-					CloseChannelTerms: closingTerms,
+					CloseChannelTerms: &closingTerms,
 				},
 			},
+			CloseChannelTerms: &closingTerms,
 		}
 
 		closeHarness := newCloser(t, &harnessCfg{
@@ -1469,7 +1754,9 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 		// includes our output.
 		feeOffer := &OfferReceivedEvent{
 			SigMsg: lnwire.ClosingComplete{
-				FeeSatoshis: absoluteFee,
+				FeeSatoshis:  absoluteFee,
+				CloserScript: remoteAddr,
+				CloseeScript: localAddr,
 				ClosingSigs: lnwire.ClosingSigs{
 					CloserAndClosee: newSigTlv[tlv.TlvType3]( //nolint:ll
 						remoteWireSig,
@@ -1498,7 +1785,9 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 		// signature as it excludes an output.
 		feeOffer := &OfferReceivedEvent{
 			SigMsg: lnwire.ClosingComplete{
-				FeeSatoshis: absoluteFee,
+				FeeSatoshis:  absoluteFee,
+				CloserScript: remoteAddr,
+				CloseeScript: localAddr,
 				ClosingSigs: lnwire.ClosingSigs{
 					CloserNoClosee: newSigTlv[tlv.TlvType1]( //nolint:ll
 						remoteWireSig,
@@ -1516,8 +1805,8 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 	// loops to enable the remote party to sign.new versions of the co-op
 	// close transaction.
 	t.Run("recv_offer_rbf_loop_iterations", func(t *testing.T) {
-		// We'll modify our s.t we're unable to pay for fees, but
-		// aren't yet dust.
+		// We'll modify our balance s.t we're unable to pay for fees,
+		// but aren't yet dust.
 		closingTerms := *closeTerms
 		closingTerms.ShutdownBalances.LocalBalance = lnwire.NewMSatFromSatoshis( //nolint:ll
 			9000,
@@ -1526,12 +1815,13 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 		firstState := &ClosingNegotiation{
 			PeerState: lntypes.Dual[AsymmetricPeerState]{
 				Local: &LocalCloseStart{
-					CloseChannelTerms: closingTerms,
+					CloseChannelTerms: &closingTerms,
 				},
 				Remote: &RemoteCloseStart{
-					CloseChannelTerms: closingTerms,
+					CloseChannelTerms: &closingTerms,
 				},
 			},
+			CloseChannelTerms: &closingTerms,
 		}
 
 		closeHarness := newCloser(t, &harnessCfg{
@@ -1542,8 +1832,10 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 
 		feeOffer := &OfferReceivedEvent{
 			SigMsg: lnwire.ClosingComplete{
-				FeeSatoshis: absoluteFee,
-				LockTime:    1,
+				CloserScript: remoteAddr,
+				CloseeScript: localAddr,
+				FeeSatoshis:  absoluteFee,
+				LockTime:     1,
 				ClosingSigs: lnwire.ClosingSigs{
 					CloserAndClosee: newSigTlv[tlv.TlvType3]( //nolint:ll
 						remoteWireSig,
@@ -1557,43 +1849,214 @@ func TestRbfCloseClosingNegotiationRemote(t *testing.T) {
 		// sig.
 		closeHarness.assertSingleRemoteRbfIteration(
 			feeOffer, balanceAfterClose, absoluteFee, sequence,
-			false,
+			false, true,
 		)
 
-		// At this point, we've completed a single RBF iteration, and
-		// want to test further iterations, so we'll use a shutdown
-		// even tot kick it all off.
-		//
-		// Before we send the shutdown messages below, we'll mark the
-		// balances as so we fast track to the negotiation state.
-		closeHarness.expectShutdownEvents(shutdownExpect{
-			allowSend:     true,
-			finalBalances: fn.Some(closingTerms.ShutdownBalances),
-			recvShutdown:  true,
-		})
-		closeHarness.expectMsgSent(
-			singleMsgMatcher[*lnwire.Shutdown](nil),
-		)
-
-		// We'll now simulate the start of the RBF loop, by receiving a
-		// new Shutdown message from the remote party. This signals
-		// that they want to obtain a new commit sig.
-		closeHarness.chanCloser.SendEvent(
-			ctx, &ShutdownReceived{ShutdownScript: remoteAddr},
-		)
-
-		// Next, we'll receive an offer from the remote party, and
-		// drive another RBF iteration. This time, we'll increase the
-		// absolute fee by 1k sats.
+		// Next, we'll receive an offer from the remote party, and drive
+		// another RBF iteration. This time, we'll increase the absolute
+		// fee by 1k sats.
 		feeOffer.SigMsg.FeeSatoshis += 1000
 		absoluteFee = feeOffer.SigMsg.FeeSatoshis
 		closeHarness.assertSingleRemoteRbfIteration(
 			feeOffer, balanceAfterClose, absoluteFee, sequence,
-			true,
+			true, true,
 		)
 
 		closeHarness.assertNoStateTransitions()
 	})
 
-	// TODO(roasbeef): cross sig case? tested isolation, so wolog?
+	// This tests that if we get an offer that has the wrong local script,
+	// then we'll emit a hard error.
+	t.Run("recv_offer_wrong_local_script", func(t *testing.T) {
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState: fn.Some[ProtocolState](startingState),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// The remote party will send a ClosingComplete message, but
+		// with the wrong local script. We should expect an error.
+		closeHarness.expectFailure(ErrWrongLocalScript)
+
+		// We'll send our remote addr as the Closee script, which should
+		// trigger an error.
+		feeOffer := &OfferReceivedEvent{
+			SigMsg: lnwire.ClosingComplete{
+				FeeSatoshis:  absoluteFee,
+				CloserScript: remoteAddr,
+				CloseeScript: remoteAddr,
+				ClosingSigs: lnwire.ClosingSigs{
+					CloserNoClosee: newSigTlv[tlv.TlvType1]( //nolint:ll
+						remoteWireSig,
+					),
+				},
+			},
+		}
+		closeHarness.chanCloser.SendEvent(ctx, feeOffer)
+
+		// We shouldn't have transitioned to a new state.
+		closeHarness.assertNoStateTransitions()
+	})
+
+	// If we receive an offer from the remote party with a different remote
+	// script, then this ensures that we'll process that and use that create
+	// the next offer.
+	t.Run("recv_offer_remote_addr_change", func(t *testing.T) {
+		closingTerms := *closeTerms
+
+		firstState := &ClosingNegotiation{
+			PeerState: lntypes.Dual[AsymmetricPeerState]{
+				Local: &LocalCloseStart{
+					CloseChannelTerms: &closingTerms,
+				},
+				Remote: &RemoteCloseStart{
+					CloseChannelTerms: &closingTerms,
+				},
+			},
+			CloseChannelTerms: &closingTerms,
+		}
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState:     fn.Some[ProtocolState](firstState),
+			localUpfrontAddr: fn.Some(localAddr),
+		})
+		defer closeHarness.stopAndAssert()
+
+		// This time, the close request sent by the remote party will
+		// modify their normal remote address. This should cause us to
+		// recognize this, and counter sign the proper co-op close
+		// transaction.
+		newRemoteAddr := lnwire.DeliveryAddress(append(
+			[]byte{txscript.OP_1, txscript.OP_DATA_32},
+			bytes.Repeat([]byte{0x03}, 32)...,
+		))
+		feeOffer := &OfferReceivedEvent{
+			SigMsg: lnwire.ClosingComplete{
+				CloserScript: newRemoteAddr,
+				CloseeScript: localAddr,
+				FeeSatoshis:  absoluteFee,
+				LockTime:     1,
+				ClosingSigs: lnwire.ClosingSigs{
+					CloserAndClosee: newSigTlv[tlv.TlvType3]( //nolint:ll
+						remoteWireSig,
+					),
+				},
+			},
+		}
+
+		// As we're already in the negotiation phase, we'll now trigger
+		// a new iteration by having the remote party send a new offer
+		// sig.
+		closeHarness.assertSingleRemoteRbfIteration(
+			feeOffer, balanceAfterClose, absoluteFee, sequence,
+			false, true,
+		)
+	})
+
+	// Any other event should be ignored.
+	assertUnknownEventFail(t, startingState)
+
+	// Sending a Spend event should transition to CloseFin.
+	assertSpendEventCloseFin(t, startingState)
+}
+
+// TestRbfCloseErr tests that the state machine is able to properly restart
+// the state machine if we encounter an error.
+func TestRbfCloseErr(t *testing.T) {
+	localBalance := lnwire.NewMSatFromSatoshis(40_000)
+	remoteBalance := lnwire.NewMSatFromSatoshis(50_000)
+
+	closeTerms := &CloseChannelTerms{
+		ShutdownBalances: ShutdownBalances{
+			LocalBalance:  localBalance,
+			RemoteBalance: remoteBalance,
+		},
+		ShutdownScripts: ShutdownScripts{
+			LocalDeliveryScript:  localAddr,
+			RemoteDeliveryScript: remoteAddr,
+		},
+	}
+	startingState := &ClosingNegotiation{
+		PeerState: lntypes.Dual[AsymmetricPeerState]{
+			Local: &CloseErr{
+				CloseChannelTerms: closeTerms,
+			},
+		},
+		CloseChannelTerms: closeTerms,
+	}
+
+	absoluteFee := btcutil.Amount(10_100)
+	balanceAfterClose := localBalance.ToSatoshis() - absoluteFee
+
+	// From the error state, we should be able to kick off a new iteration
+	// for a local fee bump.
+	t.Run("send_offer_restart", func(t *testing.T) {
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState: fn.Some[ProtocolState](startingState),
+		})
+		defer closeHarness.stopAndAssert()
+
+		rbfFeeBump := chainfee.FeePerKwFloor.FeePerVByte()
+		localOffer := &SendOfferEvent{
+			TargetFeeRate: rbfFeeBump,
+		}
+
+		// Now we expect that another full RBF iteration takes place (we
+		// initiate a new local sig).
+		closeHarness.assertSingleRbfIteration(
+			localOffer, balanceAfterClose, absoluteFee,
+			noDustExpect,
+		)
+
+		// We should terminate in the negotiation state.
+		closeHarness.assertStateTransitions(
+			&ClosingNegotiation{},
+		)
+	})
+
+	// From the error state, we should be able to handle the remote party
+	// kicking off a new iteration for a fee bump.
+	t.Run("recv_offer_restart", func(t *testing.T) {
+		startingState := &ClosingNegotiation{
+			PeerState: lntypes.Dual[AsymmetricPeerState]{
+				Remote: &CloseErr{
+					CloseChannelTerms: closeTerms,
+					Party:             lntypes.Remote,
+				},
+			},
+			CloseChannelTerms: closeTerms,
+		}
+
+		closeHarness := newCloser(t, &harnessCfg{
+			initialState:     fn.Some[ProtocolState](startingState),
+			localUpfrontAddr: fn.Some(localAddr),
+		})
+		defer closeHarness.stopAndAssert()
+
+		feeOffer := &OfferReceivedEvent{
+			SigMsg: lnwire.ClosingComplete{
+				CloserScript: remoteAddr,
+				CloseeScript: localAddr,
+				FeeSatoshis:  absoluteFee,
+				LockTime:     1,
+				ClosingSigs: lnwire.ClosingSigs{
+					CloserAndClosee: newSigTlv[tlv.TlvType3]( //nolint:ll
+						remoteWireSig,
+					),
+				},
+			},
+		}
+
+		sequence := uint32(mempool.MaxRBFSequence)
+
+		// As we're already in the negotiation phase, we'll now trigger
+		// a new iteration by having the remote party send a new offer
+		// sig.
+		closeHarness.assertSingleRemoteRbfIteration(
+			feeOffer, balanceAfterClose, absoluteFee, sequence,
+			false, true,
+		)
+	})
+
+	// Sending a Spend event should transition to CloseFin.
+	assertSpendEventCloseFin(t, startingState)
 }

lnwallet/chancloser/rbf_coop_transitions.go

@@ -1,9 +1,11 @@
 package chancloser
 
 import (
+	"bytes"
 	"fmt"
 
 	"github.com/btcsuite/btcd/btcec/v2"
+	"github.com/btcsuite/btcd/btcutil"
 	"github.com/btcsuite/btcd/chaincfg"
 	"github.com/btcsuite/btcd/mempool"
 	"github.com/btcsuite/btcd/wire"
@@ -14,11 +16,18 @@ import (
 	"github.com/lightningnetwork/lnd/lntypes"
 	"github.com/lightningnetwork/lnd/lnutils"
 	"github.com/lightningnetwork/lnd/lnwallet"
+	"github.com/lightningnetwork/lnd/lnwallet/chainfee"
 	"github.com/lightningnetwork/lnd/lnwire"
 	"github.com/lightningnetwork/lnd/protofsm"
 	"github.com/lightningnetwork/lnd/tlv"
 )
 
+var (
+	// ErrInvalidStateTransition is returned if the remote party tries to
+	// close, but the thaw height hasn't been matched yet.
+	ErrThawHeightNotReached = fmt.Errorf("thaw height not reached")
+)
+
 // sendShutdownEvents is a helper function that returns a set of daemon events
 // we need to emit when we decide that we should send a shutdown message. We'll
 // also mark the channel as borked as well, as at this point, we no longer want
@@ -104,11 +113,11 @@ func validateShutdown(chanThawHeight fn.Option[uint32],
 		// reject the shutdown message as we can't yet co-op close the
 		// channel.
 		if msg.BlockHeight < thawHeight {
-			return fmt.Errorf("initiator attempting to "+
+			return fmt.Errorf("%w: initiator attempting to "+
 				"co-op close frozen ChannelPoint(%v) "+
 				"(current_height=%v, thaw_height=%v)",
-				chanPoint, msg.BlockHeight,
-				thawHeight)
+				ErrThawHeightNotReached, chanPoint,
+				msg.BlockHeight, thawHeight)
 		}
 
 		return nil
@@ -171,7 +180,7 @@ func (c *ChannelActive) ProcessEvent(event ProtocolEvent, env *Environment,
 		}
 
 		chancloserLog.Infof("ChannelPoint(%v): sending shutdown msg, "+
-			"delivery_script=%v", env.ChanPoint, shutdownScript)
+			"delivery_script=%x", env.ChanPoint, shutdownScript)
 
 		// From here, we'll transition to the shutdown pending state. In
 		// this state we await their shutdown message (self loop), then
@@ -193,7 +202,8 @@ func (c *ChannelActive) ProcessEvent(event ProtocolEvent, env *Environment,
 	// also emit similar events like the above to send out shutdown, and
 	// also disable the channel.
 	case *ShutdownReceived:
-		chancloserLog.Infof("ChannelPoint(%v): received shutdown msg")
+		chancloserLog.Infof("ChannelPoint(%v): received shutdown msg",
+			env.ChanPoint)
 
 		// Validate that they can send the message now, and also that
 		// they haven't violated their commitment to a prior upfront
@@ -204,7 +214,7 @@ func (c *ChannelActive) ProcessEvent(event ProtocolEvent, env *Environment,
 		)
 		if err != nil {
 			chancloserLog.Errorf("ChannelPoint(%v): rejecting "+
-				"shutdown attempt: %v", err)
+				"shutdown attempt: %v", env.ChanPoint, err)
 
 			return nil, err
 		}
@@ -287,6 +297,22 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 			},
 		}, nil
 
+	// The remote party sent an offer early. We'll go to the ChannelFlushing
+	// case, and then emit the offer as a internal event, which'll be
+	// handled as an early offer.
+	case *OfferReceivedEvent:
+		chancloserLog.Infof("ChannelPoint(%v): got an early offer "+
+			"in ShutdownPending, emitting as external event",
+			env.ChanPoint)
+
+		s.EarlyRemoteOffer = fn.Some(*msg)
+
+		// We'll perform a noop update so we can wait for the actual
+		// channel flushed event.
+		return &CloseStateTransition{
+			NextState: s,
+		}, nil
+
 	// When we receive a shutdown from the remote party, we'll validate the
 	// shutdown message, then transition to the ChannelFlushing state.
 	case *ShutdownReceived:
@@ -302,7 +328,7 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 		)
 		if err != nil {
 			chancloserLog.Errorf("ChannelPoint(%v): rejecting "+
-				"shutdown attempt: %v", err)
+				"shutdown attempt: %v", env.ChanPoint, err)
 
 			return nil, err
 		}
@@ -310,7 +336,7 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 		// If the channel is *already* flushed, and the close is
 		// go straight into negotiation, as this is the RBF loop.
 		// already in progress, then we can skip the flushing state and
-		var eventsToEmit fn.Option[protofsm.EmittedEvent[ProtocolEvent]]
+		var eventsToEmit []ProtocolEvent
 		finalBalances := env.ChanObserver.FinalBalances().UnwrapOr(
 			unknownBalance,
 		)
@@ -318,11 +344,7 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 			channelFlushed := ProtocolEvent(&ChannelFlushed{
 				ShutdownBalances: finalBalances,
 			})
-			eventsToEmit = fn.Some(RbfEvent{
-				InternalEvent: []ProtocolEvent{
-					channelFlushed,
-				},
-			})
+			eventsToEmit = append(eventsToEmit, channelFlushed)
 		}
 
 		chancloserLog.Infof("ChannelPoint(%v): disabling incoming adds",
@@ -338,6 +360,19 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 		chancloserLog.Infof("ChannelPoint(%v): waiting for channel to "+
 			"be flushed...", env.ChanPoint)
 
+		// If we received a remote offer early from the remote party,
+		// then we'll add that to the set of internal events to emit.
+		s.EarlyRemoteOffer.WhenSome(func(offer OfferReceivedEvent) {
+			eventsToEmit = append(eventsToEmit, &offer)
+		})
+
+		var newEvents fn.Option[RbfEvent]
+		if len(eventsToEmit) > 0 {
+			newEvents = fn.Some(RbfEvent{
+				InternalEvent: eventsToEmit,
+			})
+		}
+
 		// We transition to the ChannelFlushing state, where we await
 		// the ChannelFlushed event.
 		return &CloseStateTransition{
@@ -348,7 +383,7 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 					RemoteDeliveryScript: msg.ShutdownScript,    //nolint:ll
 				},
 			},
-			NewEvents: eventsToEmit,
+			NewEvents: newEvents,
 		}, nil
 
 	// If we get this message, then this means that we were finally able to
@@ -361,7 +396,7 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 		// If the channel is *already* flushed, and the close is
 		// already in progress, then we can skip the flushing state and
 		// go straight into negotiation, as this is the RBF loop.
-		var eventsToEmit fn.Option[protofsm.EmittedEvent[ProtocolEvent]]
+		var eventsToEmit []ProtocolEvent
 		finalBalances := env.ChanObserver.FinalBalances().UnwrapOr(
 			unknownBalance,
 		)
@@ -369,10 +404,19 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 			channelFlushed := ProtocolEvent(&ChannelFlushed{
 				ShutdownBalances: finalBalances,
 			})
-			eventsToEmit = fn.Some(RbfEvent{
-				InternalEvent: []ProtocolEvent{
-					channelFlushed,
-				},
+			eventsToEmit = append(eventsToEmit, channelFlushed)
+		}
+
+		// If we received a remote offer early from the remote party,
+		// then we'll add that to the set of internal events to emit.
+		s.EarlyRemoteOffer.WhenSome(func(offer OfferReceivedEvent) {
+			eventsToEmit = append(eventsToEmit, &offer)
+		})
+
+		var newEvents fn.Option[RbfEvent]
+		if len(eventsToEmit) > 0 {
+			newEvents = fn.Some(RbfEvent{
+				InternalEvent: eventsToEmit,
 			})
 		}
 
@@ -383,7 +427,7 @@ func (s *ShutdownPending) ProcessEvent(event ProtocolEvent, env *Environment,
 				IdealFeeRate:    s.IdealFeeRate,
 				ShutdownScripts: s.ShutdownScripts,
 			},
-			NewEvents: eventsToEmit,
+			NewEvents: newEvents,
 		}, nil
 
 	// Any other messages in this state will result in an error, as this is
@@ -423,9 +467,6 @@ func (c *ChannelFlushing) ProcessEvent(event ProtocolEvent, env *Environment,
 
 		c.EarlyRemoteOffer = fn.Some(*msg)
 
-		// TODO(roasbeef): unit test!
-		//  * actually do this ^
-
 		// We'll perform a noop update so we can wait for the actual
 		// channel flushed event.
 		return &CloseStateTransition{
@@ -466,8 +507,6 @@ func (c *ChannelFlushing) ProcessEvent(event ProtocolEvent, env *Environment,
 
 		// We'll then use that fee rate to determine the absolute fee
 		// we'd propose.
-		//
-		// TODO(roasbeef): need to sign the 3 diff versions of this?
 		localTxOut, remoteTxOut := closeTerms.DeriveCloseTxOuts()
 		absoluteFee := env.FeeEstimator.EstimateFee(
 			env.ChanType, localTxOut, remoteTxOut,
@@ -519,12 +558,13 @@ func (c *ChannelFlushing) ProcessEvent(event ProtocolEvent, env *Environment,
 			NextState: &ClosingNegotiation{
 				PeerState: lntypes.Dual[AsymmetricPeerState]{
 					Local: &LocalCloseStart{
-						CloseChannelTerms: closeTerms,
+						CloseChannelTerms: &closeTerms,
 					},
 					Remote: &RemoteCloseStart{
-						CloseChannelTerms: closeTerms,
+						CloseChannelTerms: &closeTerms,
 					},
 				},
+				CloseChannelTerms: &closeTerms,
 			},
 			NewEvents: newEvents,
 		}, nil
@@ -568,6 +608,63 @@ func processNegotiateEvent(c *ClosingNegotiation, event ProtocolEvent,
 	}, nil
 }
 
+// updateAndValidateCloseTerms is a helper function that validates examines the
+// incoming event, and decide if we need to update the remote party's address,
+// or reject it if it doesn't include our latest address.
+func (c *ClosingNegotiation) updateAndValidateCloseTerms(event ProtocolEvent,
+) error {
+
+	assertLocalScriptMatches := func(localScriptInMsg []byte) error {
+		if !bytes.Equal(
+			c.LocalDeliveryScript, localScriptInMsg,
+		) {
+
+			return fmt.Errorf("%w: remote party sent wrong "+
+				"script, expected %x, got %x",
+				ErrWrongLocalScript, c.LocalDeliveryScript,
+				localScriptInMsg,
+			)
+		}
+
+		return nil
+	}
+
+	switch msg := event.(type) {
+	// The remote party is sending us a new request to counter sign their
+	// version of the commitment transaction.
+	case *OfferReceivedEvent:
+		// Make sure that they're sending our local script, and not
+		// something else.
+		err := assertLocalScriptMatches(msg.SigMsg.CloseeScript)
+		if err != nil {
+			return err
+		}
+
+		oldRemoteAddr := c.RemoteDeliveryScript
+		newRemoteAddr := msg.SigMsg.CloserScript
+
+		// If they're sending a new script, then we'll update to the new
+		// one.
+		if !bytes.Equal(oldRemoteAddr, newRemoteAddr) {
+			c.RemoteDeliveryScript = newRemoteAddr
+		}
+
+	// The remote party responded to our sig request with a signature for
+	// our version of the commitment transaction.
+	case *LocalSigReceived:
+		// Make sure that they're sending our local script, and not
+		// something else.
+		err := assertLocalScriptMatches(msg.SigMsg.CloserScript)
+		if err != nil {
+			return err
+		}
+
+		return nil
+	}
+
+	return nil
+}
+
 // ProcessEvent drives forward the composite states for the local and remote
 // party in response to new events. From this state, we'll continue to drive
 // forward the local and remote states until we arrive at the StateFin stage,
@@ -579,6 +676,12 @@ func (c *ClosingNegotiation) ProcessEvent(event ProtocolEvent, env *Environment,
 	// we receive a confirmation event, or we receive a signal to restart
 	// the co-op close process.
 	switch msg := event.(type) {
+	// Ignore any potential duplicate channel flushed events.
+	case *ChannelFlushed:
+		return &CloseStateTransition{
+			NextState: c,
+		}, nil
+
 	// If we get a confirmation, then the spend request we issued when we
 	// were leaving the ChannelFlushing state has been confirmed.  We'll
 	// now transition to the StateFin state.
@@ -588,45 +691,45 @@ func (c *ClosingNegotiation) ProcessEvent(event ProtocolEvent, env *Environment,
 				ConfirmedTx: msg.Tx,
 			},
 		}, nil
+	}
 
-	// Otherwise, if we receive a shutdown, or receive an event to send a
-	// shutdown, then we'll go back up to the ChannelActive state, and have
-	// it handle this event by emitting an internal event.
-	//
-	// TODO(roasbeef): both will have fee rate specified, so ok?
-	case *ShutdownReceived, *SendShutdown:
-		chancloserLog.Infof("ChannelPoint(%v): RBF case triggered, "+
-			"restarting negotiation", env.ChanPoint)
+	// At this point, we know its a new signature message. We'll validate,
+	// and maybe update the set of close terms based on what we receive. We
+	// might update the remote party's address for example.
+	if err := c.updateAndValidateCloseTerms(event); err != nil {
+		return nil, fmt.Errorf("event violates close terms: %w", err)
+	}
 
-		return &CloseStateTransition{
-			NextState: &ChannelActive{},
-			NewEvents: fn.Some(RbfEvent{
-				InternalEvent: []ProtocolEvent{event},
-			}),
-		}, nil
+	shouldRouteTo := func(party lntypes.ChannelParty) bool {
+		state := c.PeerState.GetForParty(party)
+		if state == nil {
+			return false
+		}
+
+		return state.ShouldRouteTo(event)
 	}
 
 	// If we get to this point, then we have an event that'll drive forward
 	// the negotiation process.  Based on the event, we'll figure out which
 	// state we'll be modifying.
 	switch {
-	case c.PeerState.GetForParty(lntypes.Local).ShouldRouteTo(event):
+	case shouldRouteTo(lntypes.Local):
 		chancloserLog.Infof("ChannelPoint(%v): routing %T to local "+
 			"chan state", env.ChanPoint, event)
 
 		// Drive forward the local state based on the next event.
 		return processNegotiateEvent(c, event, env, lntypes.Local)
 
-	case c.PeerState.GetForParty(lntypes.Remote).ShouldRouteTo(event):
+	case shouldRouteTo(lntypes.Remote):
 		chancloserLog.Infof("ChannelPoint(%v): routing %T to remote "+
-			"chan state", env.ChanPoint, event)
 
+			"chan state", env.ChanPoint, event)
 		// Drive forward the remote state based on the next event.
 		return processNegotiateEvent(c, event, env, lntypes.Remote)
 	}
 
-	return nil, fmt.Errorf("%w: received %T while in ClosingNegotiation",
-		ErrInvalidStateTransition, event)
+	return nil, fmt.Errorf("%w: received %T while in %v",
+		ErrInvalidStateTransition, event, c)
 }
 
 // newSigTlv is a helper function that returns a new optional TLV sig field for
@@ -645,14 +748,34 @@ func (l *LocalCloseStart) ProcessEvent(event ProtocolEvent, env *Environment,
 	// rate to generate for the closing transaction with our ideal fee
 	// rate.
 	case *SendOfferEvent:
-		// First, we'll figure out the absolute fee rate we should pay
 		// given the state of the local/remote outputs.
+		// First, we'll figure out the absolute fee rate we should pay
 		localTxOut, remoteTxOut := l.DeriveCloseTxOuts()
 		absoluteFee := env.FeeEstimator.EstimateFee(
 			env.ChanType, localTxOut, remoteTxOut,
 			msg.TargetFeeRate.FeePerKWeight(),
 		)
 
+		// If we can't actually pay for fees here, then we'll just do a
+		// noop back to the same state to await a new fee rate.
+		if !l.LocalCanPayFees(absoluteFee) {
+			chancloserLog.Infof("ChannelPoint(%v): unable to pay "+
+				"fee=%v with local balance %v, skipping "+
+				"closing_complete", env.ChanPoint, absoluteFee,
+				l.LocalBalance)
+
+			return &CloseStateTransition{
+				NextState: &CloseErr{
+					CloseChannelTerms: l.CloseChannelTerms,
+					Party:             lntypes.Local,
+					ErrState: NewErrStateCantPayForFee(
+						l.LocalBalance.ToSatoshis(),
+						absoluteFee,
+					),
+				},
+			}, nil
+		}
+
 		// Now that we know what fee we want to pay, we'll create a new
 		// signature over our co-op close transaction. For our
 		// proposals, we'll just always use the known RBF sequence
@@ -713,12 +836,13 @@ func (l *LocalCloseStart) ProcessEvent(event ProtocolEvent, env *Environment,
 		// TODO(roasbeef): type alias for protocol event
 		sendEvent := protofsm.DaemonEventSet{&protofsm.SendMsgEvent[ProtocolEvent]{ //nolint:ll
 			TargetPeer: env.ChanPeer,
-			// TODO(roasbeef): mew new func
 			Msgs: []lnwire.Message{&lnwire.ClosingComplete{
-				ChannelID:   env.ChanID,
-				FeeSatoshis: absoluteFee,
-				LockTime:    env.BlockHeight,
-				ClosingSigs: closingSigs,
+				ChannelID:    env.ChanID,
+				CloserScript: l.LocalDeliveryScript,
+				CloseeScript: l.RemoteDeliveryScript,
+				FeeSatoshis:  absoluteFee,
+				LockTime:     env.BlockHeight,
+				ClosingSigs:  closingSigs,
 			}},
 		}}
 
@@ -729,6 +853,7 @@ func (l *LocalCloseStart) ProcessEvent(event ProtocolEvent, env *Environment,
 		return &CloseStateTransition{
 			NextState: &LocalOfferSent{
 				ProposedFee:       absoluteFee,
+				ProposedFeeRate:   msg.TargetFeeRate,
 				LocalSig:          wireSig,
 				CloseChannelTerms: l.CloseChannelTerms,
 			},
@@ -837,7 +962,10 @@ func (l *LocalOfferSent) ProcessEvent(event ProtocolEvent, env *Environment,
 
 		return &CloseStateTransition{
 			NextState: &ClosePending{
-				CloseTx: closeTx,
+				CloseTx:           closeTx,
+				FeeRate:           l.ProposedFeeRate,
+				CloseChannelTerms: l.CloseChannelTerms,
+				Party:             lntypes.Local,
 			},
 			NewEvents: fn.Some(protofsm.EmittedEvent[ProtocolEvent]{
 				ExternalEvents: broadcastEvent,
@@ -980,8 +1108,12 @@ func (l *RemoteCloseStart) ProcessEvent(event ProtocolEvent, env *Environment,
 		sendEvent := &protofsm.SendMsgEvent[ProtocolEvent]{
 			TargetPeer: env.ChanPeer,
 			Msgs: []lnwire.Message{&lnwire.ClosingSig{
-				ChannelID:   env.ChanID,
-				ClosingSigs: closingSigs,
+				ChannelID:    env.ChanID,
+				CloserScript: l.RemoteDeliveryScript,
+				CloseeScript: l.LocalDeliveryScript,
+				FeeSatoshis:  msg.SigMsg.FeeSatoshis,
+				LockTime:     msg.SigMsg.LockTime,
+				ClosingSigs:  closingSigs,
 			}},
 		}
 		broadcastEvent := &protofsm.BroadcastTxn{
@@ -994,11 +1126,22 @@ func (l *RemoteCloseStart) ProcessEvent(event ProtocolEvent, env *Environment,
 			sendEvent, broadcastEvent,
 		}
 
+		// We'll also compute the final fee rate that the remote party
+		// paid based off the absolute fee and the size of the closing
+		// transaction.
+		vSize := mempool.GetTxVirtualSize(btcutil.NewTx(closeTx))
+		feeRate := chainfee.SatPerVByte(
+			int64(msg.SigMsg.FeeSatoshis) / vSize,
+		)
+
 		// Now that we've extracted the signature, we'll transition to
 		// the next state where we'll sign+broadcast the sig.
 		return &CloseStateTransition{
 			NextState: &ClosePending{
-				CloseTx: closeTx,
+				CloseTx:           closeTx,
+				FeeRate:           feeRate,
+				CloseChannelTerms: l.CloseChannelTerms,
+				Party:             lntypes.Remote,
 			},
 			NewEvents: fn.Some(protofsm.EmittedEvent[ProtocolEvent]{
 				ExternalEvents: daemonEvents,
@@ -1026,6 +1169,32 @@ func (c *ClosePending) ProcessEvent(event ProtocolEvent, env *Environment,
 			},
 		}, nil
 
+	// If we get a send offer event in this state, then we're doing a state
+	// transition to the LocalCloseStart state, so we can sign a new closing
+	// tx.
+	case *SendOfferEvent:
+		return &CloseStateTransition{
+			NextState: &LocalCloseStart{
+				CloseChannelTerms: c.CloseChannelTerms,
+			},
+			NewEvents: fn.Some(protofsm.EmittedEvent[ProtocolEvent]{
+				InternalEvent: []ProtocolEvent{msg},
+			}),
+		}, nil
+
+	// If we get an offer received event, then we're doing a state
+	// transition to the RemoteCloseStart, as the remote peer wants to sign
+	// a new closing tx.
+	case *OfferReceivedEvent:
+		return &CloseStateTransition{
+			NextState: &RemoteCloseStart{
+				CloseChannelTerms: c.CloseChannelTerms,
+			},
+			NewEvents: fn.Some(protofsm.EmittedEvent[ProtocolEvent]{
+				InternalEvent: []ProtocolEvent{msg},
+			}),
+		}, nil
+
 	default:
 
 		return &CloseStateTransition{
@@ -1043,3 +1212,44 @@ func (c *CloseFin) ProcessEvent(event ProtocolEvent, env *Environment,
 		NextState: c,
 	}, nil
 }
+
+// ProcessEvent is a semi-terminal state in the rbf-coop close state machine.
+// In this state, we hit a validation error in an earlier state, so we'll remain
+// in this state for the user to examine. We may also process new requests to
+// continue the state machine.
+func (c *CloseErr) ProcessEvent(event ProtocolEvent, env *Environment,
+) (*CloseStateTransition, error) {
+
+	switch msg := event.(type) {
+	// If we get a send offer event in this state, then we're doing a state
+	// transition to the LocalCloseStart state, so we can sign a new closing
+	// tx.
+	case *SendOfferEvent:
+		return &CloseStateTransition{
+			NextState: &LocalCloseStart{
+				CloseChannelTerms: c.CloseChannelTerms,
+			},
+			NewEvents: fn.Some(protofsm.EmittedEvent[ProtocolEvent]{
+				InternalEvent: []ProtocolEvent{msg},
+			}),
+		}, nil
+
+	// If we get an offer received event, then we're doing a state
+	// transition to the RemoteCloseStart, as the remote peer wants to sign
+	// a new closing tx.
+	case *OfferReceivedEvent:
+		return &CloseStateTransition{
+			NextState: &RemoteCloseStart{
+				CloseChannelTerms: c.CloseChannelTerms,
+			},
+			NewEvents: fn.Some(protofsm.EmittedEvent[ProtocolEvent]{
+				InternalEvent: []ProtocolEvent{msg},
+			}),
+		}, nil
+
+	default:
+		return &CloseStateTransition{
+			NextState: c,
+		}, nil
+	}
+}

lnwallet/channel.go

@@ -9269,13 +9269,19 @@ func CreateCooperativeCloseTx(fundingTxIn wire.TxIn,
 		closeTx.LockTime = lockTime
 	})
 
-	// TODO(roasbeef): needs support for dropping inputs
-
-	// Create both cooperative closure outputs, properly respecting the
-	// dust limits of both parties.
+	// Create both cooperative closure outputs, properly respecting the dust
+	// limits of both parties.
 	var localOutputIdx fn.Option[int]
 	haveLocalOutput := ourBalance >= localDust
 	if haveLocalOutput {
+		// If our script is an OP_RETURN, then we set our balance to
+		// zero.
+		if opts.customSequence.IsSome() &&
+			input.ScriptIsOpReturn(ourDeliveryScript) {
+
+			ourBalance = 0
+		}
+
 		closeTx.AddTxOut(&wire.TxOut{
 			PkScript: ourDeliveryScript,
 			Value:    int64(ourBalance),
@@ -9287,6 +9293,14 @@ func CreateCooperativeCloseTx(fundingTxIn wire.TxIn,
 	var remoteOutputIdx fn.Option[int]
 	haveRemoteOutput := theirBalance >= remoteDust
 	if haveRemoteOutput {
+		// If a party's script is an OP_RETURN, then we set their
+		// balance to zero.
+		if opts.customSequence.IsSome() &&
+			input.ScriptIsOpReturn(theirDeliveryScript) {
+
+			theirBalance = 0
+		}
+
 		closeTx.AddTxOut(&wire.TxOut{
 			PkScript: theirDeliveryScript,
 			Value:    int64(theirBalance),
@@ -9874,6 +9888,14 @@ func (lc *LightningChannel) FundingTxOut() *wire.TxOut {
 	return &lc.fundingOutput
 }
 
+// DeriveHeightHint derives the block height for the channel opening.
+func (lc *LightningChannel) DeriveHeightHint() uint32 {
+	lc.RLock()
+	defer lc.RUnlock()
+
+	return lc.channelState.DeriveHeightHint()
+}
+
 // MultiSigKeys returns the set of multi-sig keys for an channel.
 func (lc *LightningChannel) MultiSigKeys() (keychain.KeyDescriptor,
 	keychain.KeyDescriptor) {
@@ -9913,3 +9935,16 @@ func (lc *LightningChannel) FundingBlob() fn.Option[tlv.Blob] {
 		return newBlob
 	})(lc.channelState.CustomBlob)
 }
+
+// ZeroConfRealScid returns an optional real scid for the channel. If this
+// returns None, then this isn't a zero conf channel. Otherwise, the real scid
+// value will be returned.
+//
+//nolint:ll
+func (lc *LightningChannel) ZeroConfRealScid() fn.Option[lnwire.ShortChannelID] {
+	if lc.channelState.IsZeroConf() {
+		return fn.Some(lc.channelState.ZeroConfRealScid())
+	}
+
+	return fn.None[lnwire.ShortChannelID]()
+}

lnwallet/channel_test.go

@@ -20,6 +20,7 @@ import (
 	"github.com/btcsuite/btcd/btcutil"
 	"github.com/btcsuite/btcd/btcutil/txsort"
 	"github.com/btcsuite/btcd/chaincfg/chainhash"
+	"github.com/btcsuite/btcd/mempool"
 	"github.com/btcsuite/btcd/txscript"
 	"github.com/btcsuite/btcd/wire"
 	"github.com/davecgh/go-spew/spew"
@@ -2450,6 +2451,72 @@ func TestCooperativeCloseDustAdherence(t *testing.T) {
 	}
 }
 
+// TestCooperativeCloseOpReturn tests that if either party's script is an
+// OP_RETURN script, then we'll set their output value as zero on the closing
+// transaction.
+func TestCooperativeCloseOpReturn(t *testing.T) {
+	t.Parallel()
+
+	// Create a test channel which will be used for the duration of this
+	// unittest. The channel will be funded evenly with Alice having 5 BTC,
+	// and Bob having 5 BTC.
+	aliceChannel, bobChannel, err := CreateTestChannels(
+		t, channeldb.SingleFunderTweaklessBit,
+	)
+	require.NoError(t, err, "unable to create test channels")
+
+	// Alice will have a "normal" looking script, while Bob will have a
+	// script that's just an OP_RETURN.
+	aliceDeliveryScript := bobsPrivKey
+	bobDeliveryScript := []byte{txscript.OP_RETURN}
+
+	aliceFeeRate := chainfee.SatPerKWeight(
+		aliceChannel.channelState.LocalCommitment.FeePerKw,
+	)
+	aliceFee := aliceChannel.CalcFee(aliceFeeRate) + 1000
+
+	assertBobOpReturn := func(tx *wire.MsgTx) {
+		// We should still have two outputs on the commitment
+		// transaction, as Alice's is non-dust.
+		require.Len(t, tx.TxOut, 2)
+
+		// We should find that Bob's output has a zero value.
+		bobTxOut := fn.Filter(tx.TxOut, func(txOut *wire.TxOut) bool {
+			return bytes.Equal(txOut.PkScript, bobDeliveryScript)
+		})
+		require.Len(t, bobTxOut, 1)
+
+		require.True(t, bobTxOut[0].Value == 0)
+	}
+
+	// Next, we'll make a new co-op close proposal, initiated by Alice.
+	aliceSig, closeTxAlice, _, err := aliceChannel.CreateCloseProposal(
+		aliceFee, aliceDeliveryScript, bobDeliveryScript,
+		// We use a custom sequence as this rule only applies to the RBF
+		// coop channel type.
+		WithCustomSequence(mempool.MaxRBFSequence),
+	)
+	require.NoError(t, err, "unable to close channel")
+
+	assertBobOpReturn(closeTxAlice)
+
+	bobSig, _, _, err := bobChannel.CreateCloseProposal(
+		aliceFee, bobDeliveryScript, aliceDeliveryScript,
+		WithCustomSequence(mempool.MaxRBFSequence),
+	)
+	require.NoError(t, err, "unable to close channel")
+
+	// We should now be able to complete the cooperative channel closure,
+	// finding that the close tx still only has a single output.
+	closeTx, _, err := bobChannel.CompleteCooperativeClose(
+		bobSig, aliceSig, bobDeliveryScript, aliceDeliveryScript,
+		aliceFee, WithCustomSequence(mempool.MaxRBFSequence),
+	)
+	require.NoError(t, err, "unable to accept channel close")
+
+	assertBobOpReturn(closeTx)
+}
+
 // TestUpdateFeeAdjustments tests that the state machine is able to properly
 // accept valid fee changes, as well as reject any invalid fee updates.
 func TestUpdateFeeAdjustments(t *testing.T) {

lnwire/closing_complete.go

@@ -30,6 +30,14 @@ type ClosingComplete struct {
 	// ChannelID serves to identify which channel is to be closed.
 	ChannelID ChannelID
 
+	// CloserScript is the script to which the channel funds will be paid
+	// for the closer (the person sending the ClosingComplete) message.
+	CloserScript DeliveryAddress
+
+	// CloseeScript is the script to which the channel funds will be paid
+	// (the person receiving the ClosingComplete message).
+	CloseeScript DeliveryAddress
+
 	// FeeSatoshis is the total fee in satoshis that the party to the
 	// channel would like to propose for the close transaction.
 	FeeSatoshis btcutil.Amount
@@ -79,7 +87,10 @@ func decodeClosingSigs(c *ClosingSigs, tlvRecords ExtraOpaqueData) error {
 // passed io.Reader.
 func (c *ClosingComplete) Decode(r io.Reader, _ uint32) error {
 	// First, read out all the fields that are hard coded into the message.
-	err := ReadElements(r, &c.ChannelID, &c.FeeSatoshis, &c.LockTime)
+	err := ReadElements(
+		r, &c.ChannelID, &c.CloserScript, &c.CloseeScript,
+		&c.FeeSatoshis, &c.LockTime,
+	)
 	if err != nil {
 		return err
 	}
@@ -125,6 +136,13 @@ func (c *ClosingComplete) Encode(w *bytes.Buffer, _ uint32) error {
 		return err
 	}
 
+	if err := WriteDeliveryAddress(w, c.CloserScript); err != nil {
+		return err
+	}
+	if err := WriteDeliveryAddress(w, c.CloseeScript); err != nil {
+		return err
+	}
+
 	if err := WriteSatoshi(w, c.FeeSatoshis); err != nil {
 		return err
 	}

lnwire/closing_sig.go

@@ -3,6 +3,8 @@ package lnwire
 import (
 	"bytes"
 	"io"
+
+	"github.com/btcsuite/btcd/btcutil"
 )
 
 // ClosingSig is sent in response to a ClosingComplete message. It carries the
@@ -11,6 +13,22 @@ type ClosingSig struct {
 	// ChannelID serves to identify which channel is to be closed.
 	ChannelID ChannelID
 
+	// CloserScript is the script to which the channel funds will be paid
+	// for the closer (the person sending the ClosingComplete) message.
+	CloserScript DeliveryAddress
+
+	// CloseeScript is the script to which the channel funds will be paid
+	// (the person receiving the ClosingComplete message).
+	CloseeScript DeliveryAddress
+
+	// FeeSatoshis is the total fee in satoshis that the party to the
+	// channel proposed for the close transaction.
+	FeeSatoshis btcutil.Amount
+
+	// LockTime is the locktime number to be used in the input spending the
+	// funding transaction.
+	LockTime uint32
+
 	// ClosingSigs houses the 3 possible signatures that can be sent.
 	ClosingSigs
 
@@ -24,7 +42,10 @@ type ClosingSig struct {
 // io.Reader.
 func (c *ClosingSig) Decode(r io.Reader, _ uint32) error {
 	// First, read out all the fields that are hard coded into the message.
-	err := ReadElements(r, &c.ChannelID)
+	err := ReadElements(
+		r, &c.ChannelID, &c.CloserScript, &c.CloseeScript,
+		&c.FeeSatoshis, &c.LockTime,
+	)
 	if err != nil {
 		return err
 	}
@@ -53,6 +74,21 @@ func (c *ClosingSig) Encode(w *bytes.Buffer, _ uint32) error {
 		return err
 	}
 
+	if err := WriteDeliveryAddress(w, c.CloserScript); err != nil {
+		return err
+	}
+	if err := WriteDeliveryAddress(w, c.CloseeScript); err != nil {
+		return err
+	}
+
+	if err := WriteSatoshi(w, c.FeeSatoshis); err != nil {
+		return err
+	}
+
+	if err := WriteUint32(w, c.LockTime); err != nil {
+		return err
+	}
+
 	recordProducers := closingSigRecords(&c.ClosingSigs)
 
 	err := EncodeMessageExtraData(&c.ExtraData, recordProducers...)

lnwire/features.go

@@ -233,6 +233,22 @@ const (
 	// able and willing to accept keysend payments.
 	KeysendOptional = 55
 
+	// RbfCoopCloseRequired is a required feature bit that signals that
+	// the new RBF-based co-op close protocol is supported.
+	RbfCoopCloseRequired = 60
+
+	// RbfCoopCloseOptional is an optional feature bit that signals that the
+	// new RBF-based co-op close protocol is supported.
+	RbfCoopCloseOptional = 61
+
+	// RbfCoopCloseRequiredStaging is a required feature bit that signals
+	// that the new RBF-based co-op close protocol is supported.
+	RbfCoopCloseRequiredStaging = 160
+
+	// RbfCoopCloseOptionalStaging is an optional feature bit that signals
+	// that the new RBF-based co-op close protocol is supported.
+	RbfCoopCloseOptionalStaging = 161
+
 	// ScriptEnforcedLeaseRequired is a required feature bit that signals
 	// that the node requires channels having zero-fee second-level HTLC
 	// transactions, which also imply anchor commitments, along with an
@@ -373,6 +389,10 @@ var Features = map[FeatureBit]string{
 	ExperimentalEndorsementOptional:      "endorsement-x",
 	Bolt11BlindedPathsOptional:           "bolt-11-blinded-paths",
 	Bolt11BlindedPathsRequired:           "bolt-11-blinded-paths",
+	RbfCoopCloseOptional:                 "rbf-coop-close",
+	RbfCoopCloseRequired:                 "rbf-coop-close",
+	RbfCoopCloseOptionalStaging:          "rbf-coop-close-x",
+	RbfCoopCloseRequiredStaging:          "rbf-coop-close-x",
 }
 
 // RawFeatureVector represents a set of feature bits as defined in BOLT-09.  A

lnwire/lnwire_test.go

@@ -1355,6 +1355,18 @@ func TestLightningWireProtocol(t *testing.T) {
 				LockTime:    uint32(r.Int63()),
 				ClosingSigs: ClosingSigs{},
 			}
+			req.CloserScript, err = randDeliveryAddress(r)
+			if err != nil {
+				t.Fatalf("unable to generate delivery "+
+					"address: %v", err)
+				return
+			}
+			req.CloseeScript, err = randDeliveryAddress(r)
+			if err != nil {
+				t.Fatalf("unable to generate delivery "+
+					"address: %v", err)
+				return
+			}
 
 			if r.Intn(2) == 0 {
 				sig := req.CloserNoClosee.Zero()
@@ -1403,6 +1415,20 @@ func TestLightningWireProtocol(t *testing.T) {
 			req := ClosingSig{
 				ChannelID:   ChannelID(c),
 				ClosingSigs: ClosingSigs{},
+				FeeSatoshis: btcutil.Amount(r.Int63()),
+				LockTime:    uint32(r.Int63()),
+			}
+			req.CloserScript, err = randDeliveryAddress(r)
+			if err != nil {
+				t.Fatalf("unable to generate delivery "+
+					"address: %v", err)
+				return
+			}
+			req.CloseeScript, err = randDeliveryAddress(r)
+			if err != nil {
+				t.Fatalf("unable to generate delivery "+
+					"address: %v", err)
+				return
 			}
 
 			if r.Intn(2) == 0 {

log.go

@@ -44,9 +44,11 @@ import (
 	"github.com/lightningnetwork/lnd/lnwallet/chanfunding"
 	"github.com/lightningnetwork/lnd/lnwallet/rpcwallet"
 	"github.com/lightningnetwork/lnd/monitoring"
+	"github.com/lightningnetwork/lnd/msgmux"
 	"github.com/lightningnetwork/lnd/netann"
 	"github.com/lightningnetwork/lnd/peer"
 	"github.com/lightningnetwork/lnd/peernotifier"
+	"github.com/lightningnetwork/lnd/protofsm"
 	"github.com/lightningnetwork/lnd/routing"
 	"github.com/lightningnetwork/lnd/routing/blindedpath"
 	"github.com/lightningnetwork/lnd/routing/localchans"
@@ -178,6 +180,7 @@ func SetupLoggers(root *build.SubLoggerManager, interceptor signal.Interceptor)
 	AddSubLogger(root, "PEER", interceptor, peer.UseLogger)
 	AddSubLogger(root, "CHCL", interceptor, chancloser.UseLogger)
 	AddSubLogger(root, "LCHN", interceptor, localchans.UseLogger)
+	AddSubLogger(root, "PFSM", interceptor, protofsm.UseLogger)
 
 	AddSubLogger(root, routing.Subsystem, interceptor, routing.UseLogger)
 	AddSubLogger(root, routerrpc.Subsystem, interceptor, routerrpc.UseLogger)
@@ -200,6 +203,7 @@ func SetupLoggers(root *build.SubLoggerManager, interceptor signal.Interceptor)
 	)
 	AddV1SubLogger(root, graphdb.Subsystem, interceptor, graphdb.UseLogger)
 	AddSubLogger(root, chainio.Subsystem, interceptor, chainio.UseLogger)
+	AddSubLogger(root, msgmux.Subsystem, interceptor, msgmux.UseLogger)
 }
 
 // AddSubLogger is a helper method to conveniently create and register the

msgmux/msg_router.go

@@ -1,6 +1,7 @@
 package msgmux
 
 import (
+	"context"
 	"fmt"
 	"maps"
 	"sync"
@@ -46,7 +47,7 @@ type Endpoint interface {
 
 	// SendMessage handles the target message, and returns true if the
 	// message was able being processed.
-	SendMessage(msg PeerMsg) bool
+	SendMessage(ctx context.Context, msg PeerMsg) bool
 }
 
 // MsgRouter is an interface that represents a message router, which is generic
@@ -66,7 +67,7 @@ type Router interface {
 	RouteMsg(PeerMsg) error
 
 	// Start starts the peer message router.
-	Start()
+	Start(ctx context.Context)
 
 	// Stop stops the peer message router.
 	Stop()
@@ -137,12 +138,12 @@ func NewMultiMsgRouter() *MultiMsgRouter {
 }
 
 // Start starts the peer message router.
-func (p *MultiMsgRouter) Start() {
+func (p *MultiMsgRouter) Start(ctx context.Context) {
 	log.Infof("Starting Router")
 
 	p.startOnce.Do(func() {
 		p.wg.Add(1)
-		go p.msgRouter()
+		go p.msgRouter(ctx)
 	})
 }
 
@@ -179,7 +180,7 @@ func (p *MultiMsgRouter) endpoints() fn.Result[EndpointsMap] {
 }
 
 // msgRouter is the main goroutine that handles all incoming messages.
-func (p *MultiMsgRouter) msgRouter() {
+func (p *MultiMsgRouter) msgRouter(ctx context.Context) {
 	defer p.wg.Done()
 
 	// endpoints is a map of all registered endpoints.
@@ -235,7 +236,7 @@ func (p *MultiMsgRouter) msgRouter() {
 						"msg %T to endpoint %s", msg,
 						endpoint.Name())
 
-					sent := endpoint.SendMessage(msg)
+					sent := endpoint.SendMessage(ctx, msg)
 					couldSend = couldSend || sent
 				}
 			}
@@ -243,7 +244,7 @@ func (p *MultiMsgRouter) msgRouter() {
 			var err error
 			if !couldSend {
 				log.Tracef("MsgRouter: unable to route "+
-					"msg %T", msg)
+					"msg %T", msg.Message)
 
 				err = ErrUnableToRouteMsg
 			}

msgmux/msg_router_test.go

@@ -1,6 +1,7 @@
 package msgmux
 
 import (
+	"context"
 	"testing"
 
 	"github.com/lightningnetwork/lnd/lnwire"
@@ -24,8 +25,8 @@ func (m *mockEndpoint) CanHandle(msg PeerMsg) bool {
 	return args.Bool(0)
 }
 
-func (m *mockEndpoint) SendMessage(msg PeerMsg) bool {
-	args := m.Called(msg)
+func (m *mockEndpoint) SendMessage(ctx context.Context, msg PeerMsg) bool {
+	args := m.Called(ctx, msg)
 
 	return args.Bool(0)
 }
@@ -33,8 +34,9 @@ func (m *mockEndpoint) SendMessage(msg PeerMsg) bool {
 // TestMessageRouterOperation tests the basic operation of the message router:
 // add new endpoints, route to them, remove, them, etc.
 func TestMessageRouterOperation(t *testing.T) {
+	ctx := context.Background()
 	msgRouter := NewMultiMsgRouter()
-	msgRouter.Start()
+	msgRouter.Start(ctx)
 	defer msgRouter.Stop()
 
 	openChanMsg := PeerMsg{
@@ -57,7 +59,7 @@ func TestMessageRouterOperation(t *testing.T) {
 	fundingEndpoint.On("CanHandle", openChanMsg).Return(true)
 	fundingEndpoint.On("CanHandle", errorMsg).Return(false)
 	fundingEndpoint.On("CanHandle", commitSigMsg).Return(false)
-	fundingEndpoint.On("SendMessage", openChanMsg).Return(true)
+	fundingEndpoint.On("SendMessage", ctx, openChanMsg).Return(true)
 
 	commitEndpoint := &mockEndpoint{}
 	commitEndpointName := "commit"
@@ -65,7 +67,7 @@ func TestMessageRouterOperation(t *testing.T) {
 	commitEndpoint.On("CanHandle", commitSigMsg).Return(true)
 	commitEndpoint.On("CanHandle", openChanMsg).Return(false)
 	commitEndpoint.On("CanHandle", errorMsg).Return(false)
-	commitEndpoint.On("SendMessage", commitSigMsg).Return(true)
+	commitEndpoint.On("SendMessage", ctx, commitSigMsg).Return(true)
 
 	t.Run("add endpoints", func(t *testing.T) {
 		// First, we'll add the funding endpoint to the router.
@@ -113,8 +115,10 @@ func TestMessageRouterOperation(t *testing.T) {
 		fundingEndpoint.AssertCalled(t, "CanHandle", openChanMsg)
 		commitEndpoint.AssertCalled(t, "CanHandle", openChanMsg)
 
-		fundingEndpoint.AssertCalled(t, "SendMessage", openChanMsg)
-		commitEndpoint.AssertNotCalled(t, "SendMessage", openChanMsg)
+		fundingEndpoint.AssertCalled(t, "SendMessage", ctx, openChanMsg)
+		commitEndpoint.AssertNotCalled(
+			t, "SendMessage", ctx, openChanMsg,
+		)
 
 		// We'll do the same for the commit sig message.
 		require.NoError(t, msgRouter.RouteMsg(commitSigMsg))
@@ -122,8 +126,10 @@ func TestMessageRouterOperation(t *testing.T) {
 		fundingEndpoint.AssertCalled(t, "CanHandle", commitSigMsg)
 		commitEndpoint.AssertCalled(t, "CanHandle", commitSigMsg)
 
-		commitEndpoint.AssertCalled(t, "SendMessage", commitSigMsg)
-		fundingEndpoint.AssertNotCalled(t, "SendMessage", commitSigMsg)
+		commitEndpoint.AssertCalled(t, "SendMessage", ctx, commitSigMsg)
+		fundingEndpoint.AssertNotCalled(
+			t, "SendMessage", ctx, commitSigMsg,
+		)
 	})
 
 	t.Run("remove endpoints", func(t *testing.T) {

peer/brontide_test.go

@@ -689,15 +689,9 @@ func TestChooseDeliveryScript(t *testing.T) {
 		userScript     lnwire.DeliveryAddress
 		shutdownScript lnwire.DeliveryAddress
 		expectedScript lnwire.DeliveryAddress
+		newAddr        func() ([]byte, error)
 		expectedError  error
 	}{
-		{
-			name:           "Neither set",
-			userScript:     nil,
-			shutdownScript: nil,
-			expectedScript: nil,
-			expectedError:  nil,
-		},
 		{
 			name:           "Both set and equal",
 			userScript:     script1,
@@ -726,6 +720,16 @@ func TestChooseDeliveryScript(t *testing.T) {
 			expectedScript: script2,
 			expectedError:  nil,
 		},
+		{
+			name:           "no script generate new one",
+			userScript:     nil,
+			shutdownScript: nil,
+			expectedScript: script2,
+			newAddr: func() ([]byte, error) {
+				return script2, nil
+			},
+			expectedError: nil,
+		},
 	}
 
 	for _, test := range tests {
@@ -734,13 +738,16 @@ func TestChooseDeliveryScript(t *testing.T) {
 		t.Run(test.name, func(t *testing.T) {
 			script, err := chooseDeliveryScript(
 				test.shutdownScript, test.userScript,
+				test.newAddr,
 			)
 			if err != test.expectedError {
-				t.Fatalf("Expected: %v, got: %v", test.expectedError, err)
+				t.Fatalf("Expected: %v, got: %v",
+					test.expectedError, err)
 			}
 
 			if !bytes.Equal(script, test.expectedScript) {
-				t.Fatalf("Expected: %x, got: %x", test.expectedScript, script)
+				t.Fatalf("Expected: %x, got: %x",
+					test.expectedScript, script)
 			}
 		})
 	}
@@ -853,8 +860,10 @@ func TestCustomShutdownScript(t *testing.T) {
 				t.Fatalf("did not receive shutdown message")
 			case err := <-errChan:
 				// Fail if we do not expect an error.
-				if err != test.expectedError {
-					t.Fatalf("error closing channel: %v", err)
+				if test.expectedError != nil {
+					require.ErrorIs(
+						t, err, test.expectedError,
+					)
 				}
 
 				// Terminate the test early if have received an error, no

peer/chan_observer.go

@@ -0,0 +1,174 @@
+package peer
+
+import (
+	"github.com/btcsuite/btcd/wire"
+	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/fn/v2"
+	"github.com/lightningnetwork/lnd/htlcswitch"
+	"github.com/lightningnetwork/lnd/lntypes"
+	"github.com/lightningnetwork/lnd/lnwallet/chancloser"
+)
+
+// channelView is a view into the current active/global channel state machine
+// for a given link.
+type channelView interface {
+	// OweCommitment returns a boolean value reflecting whether we need to
+	// send out a commitment signature because there are outstanding local
+	// updates and/or updates in the local commit tx that aren't reflected
+	// in the remote commit tx yet.
+	OweCommitment() bool
+
+	// IsChannelClean returns true if neither side has pending commitments,
+	// neither side has HTLC's, and all updates are locked in irrevocably.
+	IsChannelClean() bool
+
+	// MarkCoopBroadcasted persistently marks that the channel close
+	// transaction has been broadcast.
+	MarkCoopBroadcasted(*wire.MsgTx, lntypes.ChannelParty) error
+
+	// StateSnapshot returns a snapshot of the current fully committed
+	// state within the channel.
+	StateSnapshot() *channeldb.ChannelSnapshot
+
+	// MarkShutdownSent persists the given ShutdownInfo. The existence of
+	// the ShutdownInfo represents the fact that the Shutdown message has
+	// been sent by us and so should be re-sent on re-establish.
+	MarkShutdownSent(info *channeldb.ShutdownInfo) error
+}
+
+// linkController is capable of controlling the flow out incoming/outgoing
+// HTLCs to/from the link.
+type linkController interface {
+	// DisableAdds sets the ChannelUpdateHandler state to allow/reject
+	// UpdateAddHtlc's in the specified direction. It returns true if the
+	// state was changed and false if the desired state was already set
+	// before the method was called.
+	DisableAdds(outgoing bool) bool
+
+	// IsFlushing returns true when UpdateAddHtlc's are disabled in the
+	// direction of the argument.
+	IsFlushing(direction bool) bool
+}
+
+// linkNetworkController is an interface that represents an object capable of
+// managing interactions with the active channel links from the PoV of the
+// gossip network.
+type linkNetworkController interface {
+	// RequestDisable disables a channel by its channel point.
+	RequestDisable(wire.OutPoint, bool) error
+}
+
+// chanObserver implements the chancloser.ChanObserver interface for the
+// existing LightningChannel struct/instance.
+type chanObserver struct {
+	chanView    channelView
+	link        linkController
+	linkNetwork linkNetworkController
+}
+
+// newChanObserver creates a new instance of a chanObserver from an active
+// channelView.
+func newChanObserver(chanView channelView,
+	link linkController, linkNetwork linkNetworkController) *chanObserver {
+
+	return &chanObserver{
+		chanView:    chanView,
+		link:        link,
+		linkNetwork: linkNetwork,
+	}
+}
+
+// NoDanglingUpdates returns true if there are no dangling updates in the
+// channel. In other words, there are no active update messages that haven't
+// already been covered by a commit sig.
+func (l *chanObserver) NoDanglingUpdates() bool {
+	return !l.chanView.OweCommitment()
+}
+
+// DisableIncomingAdds instructs the channel link to disable process new
+// incoming add messages.
+func (l *chanObserver) DisableIncomingAdds() error {
+	// If there's no link, then we don't need to disable any adds.
+	if l.link == nil {
+		return nil
+	}
+
+	disabled := l.link.DisableAdds(htlcswitch.Incoming)
+	if disabled {
+		chanPoint := l.chanView.StateSnapshot().ChannelPoint
+		peerLog.Debugf("ChannelPoint(%v): link already disabled",
+			chanPoint)
+	}
+
+	return nil
+}
+
+// DisableOutgoingAdds instructs the channel link to disable process new
+// outgoing add messages.
+func (l *chanObserver) DisableOutgoingAdds() error {
+	// If there's no link, then we don't need to disable any adds.
+	if l.link == nil {
+		return nil
+	}
+
+	_ = l.link.DisableAdds(htlcswitch.Outgoing)
+
+	return nil
+}
+
+// MarkCoopBroadcasted persistently marks that the channel close transaction
+// has been broadcast.
+func (l *chanObserver) MarkCoopBroadcasted(tx *wire.MsgTx, local bool) error {
+	return l.chanView.MarkCoopBroadcasted(tx, lntypes.Local)
+}
+
+// MarkShutdownSent persists the given ShutdownInfo. The existence of the
+// ShutdownInfo represents the fact that the Shutdown message has been sent by
+// us and so should be re-sent on re-establish.
+func (l *chanObserver) MarkShutdownSent(deliveryAddr []byte,
+	isInitiator bool) error {
+
+	shutdownInfo := channeldb.NewShutdownInfo(deliveryAddr, isInitiator)
+	return l.chanView.MarkShutdownSent(shutdownInfo)
+}
+
+// FinalBalances is the balances of the channel once it has been flushed. If
+// Some, then this indicates that the channel is now in a state where it's
+// always flushed, so we can accelerate the state transitions.
+func (l *chanObserver) FinalBalances() fn.Option[chancloser.ShutdownBalances] {
+	chanClean := l.chanView.IsChannelClean()
+
+	switch {
+	// If we have a link, then the balances are final if both the incoming
+	// and outgoing adds are disabled _and_ the channel is clean.
+	case l.link != nil && l.link.IsFlushing(htlcswitch.Incoming) &&
+		l.link.IsFlushing(htlcswitch.Outgoing) && chanClean:
+
+		fallthrough
+
+	// If we don't have a link, then this is a restart case, so the
+	// balances are final.
+	case l.link == nil:
+		snapshot := l.chanView.StateSnapshot()
+
+		return fn.Some(chancloser.ShutdownBalances{
+			LocalBalance:  snapshot.LocalBalance,
+			RemoteBalance: snapshot.RemoteBalance,
+		})
+
+	// Otherwise, the link is still active and not flushed, so the balances
+	// aren't yet final.
+	default:
+		return fn.None[chancloser.ShutdownBalances]()
+	}
+}
+
+// DisableChannel disables the target channel.
+func (l *chanObserver) DisableChannel() error {
+	op := l.chanView.StateSnapshot().ChannelPoint
+	return l.linkNetwork.RequestDisable(op, false)
+}
+
+// A compile-time assertion to ensure that chanObserver meets the
+// chancloser.ChanStateObserver interface.
+var _ chancloser.ChanStateObserver = (*chanObserver)(nil)

peer/daemon_adapters.go

@@ -0,0 +1,141 @@
+package peer
+
+import (
+	"fmt"
+
+	"github.com/btcsuite/btcd/btcec/v2"
+	"github.com/btcsuite/btcd/chaincfg/chainhash"
+	"github.com/btcsuite/btcd/wire"
+	"github.com/lightningnetwork/lnd/chainntnfs"
+	"github.com/lightningnetwork/lnd/lnwire"
+	"github.com/lightningnetwork/lnd/protofsm"
+)
+
+// MessageSender is an interface that represents an object capable of sending
+// p2p messages to a destination.
+type MessageSender interface {
+	// SendMessages sends the target set of messages to the target peer.
+	//
+	// TODO(roasbeef): current impl bound to single peer, need server
+	// pointer otherwise
+	SendMessages(btcec.PublicKey, []lnwire.Message) error
+}
+
+// flexMessageSender is a message sender-like interface that is aware of
+// sync/async semantics, and is bound to a single peer.
+type flexMessageSender interface {
+	// SendMessage sends a variadic number of high-priority messages to the
+	// remote peer. The first argument denotes if the method should block
+	// until the messages have been sent to the remote peer or an error is
+	// returned, otherwise it returns immediately after queuing.
+	SendMessage(sync bool, msgs ...lnwire.Message) error
+}
+
+// peerMsgSender implements the MessageSender interface for a single peer.
+// It'll return an error if the target public isn't equal to public key of the
+// backing peer.
+type peerMsgSender struct {
+	sender  flexMessageSender
+	peerPub btcec.PublicKey
+}
+
+// newPeerMsgSender creates a new instance of a peerMsgSender.
+func newPeerMsgSender(peerPub btcec.PublicKey,
+	msgSender flexMessageSender) *peerMsgSender {
+
+	return &peerMsgSender{
+		sender:  msgSender,
+		peerPub: peerPub,
+	}
+}
+
+// SendMessages sends the target set of messages to the target peer.
+//
+// TODO(roasbeef): current impl bound to single peer, need server pointer
+// otherwise?
+func (p *peerMsgSender) SendMessages(pub btcec.PublicKey,
+	msgs []lnwire.Message) error {
+
+	if !p.peerPub.IsEqual(&pub) {
+		return fmt.Errorf("wrong peer pubkey: got %x, can only send "+
+			"to %x", pub.SerializeCompressed(),
+			p.peerPub.SerializeCompressed())
+	}
+
+	return p.sender.SendMessage(true, msgs...)
+}
+
+// TxBroadcaster is an interface that represents an object capable of
+// broadcasting transactions to the network.
+type TxBroadcaster interface {
+	// PublishTransaction broadcasts a transaction to the network.
+	PublishTransaction(*wire.MsgTx, string) error
+}
+
+// LndAdapterCfg is a struct that holds the configuration for the
+// LndDaemonAdapters instance.
+type LndAdapterCfg struct {
+	// MsgSender is capable of sending messages to an arbitrary peer.
+	MsgSender MessageSender
+
+	// TxBroadcaster is capable of broadcasting a transaction to the
+	// network.
+	TxBroadcaster TxBroadcaster
+
+	// ChainNotifier is capable of receiving notifications for on-chain
+	// events.
+	ChainNotifier chainntnfs.ChainNotifier
+}
+
+// LndDaemonAdapters is a struct that implements the protofsm.DaemonAdapters
+// interface using common lnd abstractions.
+type LndDaemonAdapters struct {
+	cfg LndAdapterCfg
+}
+
+// NewLndDaemonAdapters creates a new instance of the lndDaemonAdapters struct.
+func NewLndDaemonAdapters(cfg LndAdapterCfg) *LndDaemonAdapters {
+	return &LndDaemonAdapters{
+		cfg: cfg,
+	}
+}
+
+// SendMessages sends the target set of messages to the target peer.
+func (l *LndDaemonAdapters) SendMessages(pub btcec.PublicKey,
+	msgs []lnwire.Message) error {
+
+	return l.cfg.MsgSender.SendMessages(pub, msgs)
+}
+
+// BroadcastTransaction broadcasts a transaction with the target label.
+func (l *LndDaemonAdapters) BroadcastTransaction(tx *wire.MsgTx,
+	label string) error {
+
+	return l.cfg.TxBroadcaster.PublishTransaction(tx, label)
+}
+
+// RegisterConfirmationsNtfn registers an intent to be notified once txid
+// reaches numConfs confirmations.
+func (l *LndDaemonAdapters) RegisterConfirmationsNtfn(txid *chainhash.Hash,
+	pkScript []byte, numConfs, heightHint uint32,
+	opts ...chainntnfs.NotifierOption,
+) (*chainntnfs.ConfirmationEvent, error) {
+
+	return l.cfg.ChainNotifier.RegisterConfirmationsNtfn(
+		txid, pkScript, numConfs, heightHint, opts...,
+	)
+}
+
+// RegisterSpendNtfn registers an intent to be notified once the target
+// outpoint is successfully spent within a transaction.
+func (l *LndDaemonAdapters) RegisterSpendNtfn(outpoint *wire.OutPoint,
+	pkScript []byte, heightHint uint32) (*chainntnfs.SpendEvent, error) {
+
+	return l.cfg.ChainNotifier.RegisterSpendNtfn(
+		outpoint, pkScript, heightHint,
+	)
+}
+
+// A compile time check to ensure that lndDaemonAdapters fully implements the
+// DaemonAdapters interface.
+var _ protofsm.DaemonAdapters = (*LndDaemonAdapters)(nil)

peer/test_utils.go

@@ -337,7 +337,7 @@ func createTestPeerWithChannel(t *testing.T, updateChan func(a,
 	chanID := lnwire.NewChanIDFromOutPoint(channelAlice.ChannelPoint())
 	alicePeer.activeChannels.Store(chanID, channelAlice)
 
-	alicePeer.wg.Add(1)
+	alicePeer.cg.WgAdd(1)
 	go alicePeer.channelManager()
 
 	return &peerTestCtx{

protofsm/msg_mapper.go

@@ -2,7 +2,7 @@ package protofsm
 
 import (
 	"github.com/lightningnetwork/lnd/fn/v2"
-	"github.com/lightningnetwork/lnd/lnwire"
+	"github.com/lightningnetwork/lnd/msgmux"
 )
 
 // MsgMapper is used to map incoming wire messages into a FSM event. This is
@@ -11,5 +11,5 @@ import (
 type MsgMapper[Event any] interface {
 	// MapMsg maps a wire message into a FSM event. If the message is not
 	// mappable, then an None is returned.
-	MapMsg(msg lnwire.Message) fn.Option[Event]
+	MapMsg(msg msgmux.PeerMsg) fn.Option[Event]
 }

protofsm/state_machine.go

@@ -14,6 +14,7 @@ import (
 	"github.com/lightningnetwork/lnd/fn/v2"
 	"github.com/lightningnetwork/lnd/lnutils"
 	"github.com/lightningnetwork/lnd/lnwire"
+	"github.com/lightningnetwork/lnd/msgmux"
 )
 
 const (
@@ -77,7 +78,8 @@ type State[Event any, Env Environment] interface {
 	// otherwise.
 	IsTerminal() bool
 
-	// TODO(roasbeef): also add state serialization?
+	// String returns a human readable string that represents the state.
+	String() string
 }
 
 // DaemonAdapters is a set of methods that server as adapters to bridge the
@@ -249,7 +251,7 @@ func (s *StateMachine[Event, Env]) SendEvent(ctx context.Context, event Event) {
 
 // CanHandle returns true if the target message can be routed to the state
 // machine.
-func (s *StateMachine[Event, Env]) CanHandle(msg lnwire.Message) bool {
+func (s *StateMachine[Event, Env]) CanHandle(msg msgmux.PeerMsg) bool {
 	cfgMapper := s.cfg.MsgMapper
 	return fn.MapOptionZ(cfgMapper, func(mapper MsgMapper[Event]) bool {
 		return mapper.MapMsg(msg).IsSome()
@@ -266,7 +268,7 @@ func (s *StateMachine[Event, Env]) Name() string {
 // returned indicating that the message was processed. Otherwise, false is
 // returned.
 func (s *StateMachine[Event, Env]) SendMessage(ctx context.Context,
-	msg lnwire.Message) bool {
+	msg msgmux.PeerMsg) bool {
 
 	// If we have no message mapper, then return false as we can't process
 	// this message.
@@ -343,7 +345,7 @@ func (s *StateMachine[Event, Env]) executeDaemonEvent(ctx context.Context,
 	// any preconditions as well as post-send events.
 	case *SendMsgEvent[Event]:
 		sendAndCleanUp := func() error {
-			s.log.DebugS(ctx, "Sending message to target",
+			s.log.DebugS(ctx, "Sending message:",
 				btclog.Hex6("target", daemonEvent.TargetPeer.SerializeCompressed()),
 				"messages", lnutils.SpewLogClosure(daemonEvent.Msgs))
 
@@ -375,9 +377,18 @@ func (s *StateMachine[Event, Env]) executeDaemonEvent(ctx context.Context,
 			})
 		}
 
-		// If this doesn't have a SendWhen predicate, then we can just
-		// send it off right away.
-		if !daemonEvent.SendWhen.IsSome() {
+		canSend := func() bool {
+			return fn.MapOptionZ(
+				daemonEvent.SendWhen,
+				func(pred SendPredicate) bool {
+					return pred()
+				},
+			)
+		}
+
+		// If this doesn't have a SendWhen predicate, or if it's already
+		// true, then we can just send it off right away.
+		if !daemonEvent.SendWhen.IsSome() || canSend() {
 			return sendAndCleanUp()
 		}
 
@@ -395,14 +406,7 @@ func (s *StateMachine[Event, Env]) executeDaemonEvent(ctx context.Context,
 			for {
 				select {
 				case <-predicateTicker.C:
-					canSend := fn.MapOptionZ(
-						daemonEvent.SendWhen,
-						func(pred SendPredicate) bool {
-							return pred()
-						},
-					)
-
-					if canSend {
+					if canSend() {
 						s.log.InfoS(ctx, "Send active predicate")
 
 						err := sendAndCleanUp()
@@ -435,7 +439,7 @@ func (s *StateMachine[Event, Env]) executeDaemonEvent(ctx context.Context,
 			daemonEvent.Tx, daemonEvent.Label,
 		)
 		if err != nil {
-			return fmt.Errorf("unable to broadcast txn: %w", err)
+			log.Errorf("unable to broadcast txn: %v", err)
 		}
 
 		return nil
@@ -597,8 +601,8 @@ func (s *StateMachine[Event, Env]) applyEvents(ctx context.Context,
 			}
 
 			s.log.InfoS(ctx, "State transition",
-				btclog.Fmt("from_state", "%T", currentState),
-				btclog.Fmt("to_state", "%T", transition.NextState))
+				btclog.Fmt("from_state", "%v", currentState),
+				btclog.Fmt("to_state", "%v", transition.NextState))
 
 			// With our events processed, we'll now update our
 			// internal state.

protofsm/state_machine_test.go

@@ -13,6 +13,7 @@ import (
 	"github.com/lightningnetwork/lnd/chainntnfs"
 	"github.com/lightningnetwork/lnd/fn/v2"
 	"github.com/lightningnetwork/lnd/lnwire"
+	"github.com/lightningnetwork/lnd/msgmux"
 	"github.com/stretchr/testify/mock"
 	"github.com/stretchr/testify/require"
 )
@@ -51,6 +52,10 @@ type dummyStateStart struct {
 	canSend *atomic.Bool
 }
 
+func (d *dummyStateStart) String() string {
+	return "dummyStateStart"
+}
+
 var (
 	hexDecode = func(keyStr string) []byte {
 		keyBytes, _ := hex.DecodeString(keyStr)
@@ -134,6 +139,10 @@ func (d *dummyStateStart) IsTerminal() bool {
 type dummyStateFin struct {
 }
 
+func (d *dummyStateFin) String() string {
+	return "dummyStateFin"
+}
+
 func (d *dummyStateFin) ProcessEvent(event dummyEvents, env *dummyEnv,
 ) (*StateTransition[dummyEvents, *dummyEnv], error) {
 
@@ -397,7 +406,7 @@ type dummyMsgMapper struct {
 	mock.Mock
 }
 
-func (d *dummyMsgMapper) MapMsg(wireMsg lnwire.Message) fn.Option[dummyEvents] {
+func (d *dummyMsgMapper) MapMsg(wireMsg msgmux.PeerMsg) fn.Option[dummyEvents] {
 	args := d.Called(wireMsg)
 
 	//nolint:forcetypeassert
@@ -421,8 +430,12 @@ func TestStateMachineMsgMapper(t *testing.T) {
 
 	// The only thing we know how to map is the error message, which'll
 	// terminate the state machine.
-	wireError := &lnwire.Error{}
-	initMsg := &lnwire.Init{}
+	wireError := msgmux.PeerMsg{
+		Message: &lnwire.Error{},
+	}
+	initMsg := msgmux.PeerMsg{
+		Message: &lnwire.Init{},
+	}
 	dummyMapper.On("MapMsg", wireError).Return(
 		fn.Some(dummyEvents(&goToFin{})),
 	)
@@ -448,7 +461,7 @@ func TestStateMachineMsgMapper(t *testing.T) {
 
 	// First, we'll verify that the CanHandle method works as expected.
 	require.True(t, stateMachine.CanHandle(wireError))
-	require.False(t, stateMachine.CanHandle(&lnwire.Init{}))
+	require.False(t, stateMachine.CanHandle(initMsg))
 
 	// Next, we'll attempt to send the wire message into the state machine.
 	// We should transition to the final state.

rpcserver.go

@@ -2801,14 +2801,33 @@ func (r *rpcServer) CloseChannel(in *lnrpc.CloseChannelRequest,
 			}
 		}
 
+		var (
+			chanInSwitch     = true
+			chanHasRbfCloser = r.server.ChanHasRbfCoopCloser(
+				channel.IdentityPub, *chanPoint,
+			)
+		)
+
 		// If the link is not known by the switch, we cannot gracefully close
 		// the channel.
 		channelID := lnwire.NewChanIDFromOutPoint(*chanPoint)
+
 		if _, err := r.server.htlcSwitch.GetLink(channelID); err != nil {
-			rpcsLog.Debugf("Trying to non-force close offline channel with "+
-				"chan_point=%v", chanPoint)
-			return fmt.Errorf("unable to gracefully close channel while peer "+
-				"is offline (try force closing it instead): %v", err)
+			chanInSwitch = false
+
+			// The channel isn't in the switch, but if there's an
+			// active chan closer for the channel, and it's of the
+			// RBF variant, then we can actually bypass the switch.
+			// Otherwise, we'll return an error.
+			if !chanHasRbfCloser {
+				rpcsLog.Debugf("Trying to non-force close "+
+					"offline channel with chan_point=%v",
+					chanPoint)
+
+				return fmt.Errorf("unable to gracefully close "+
+					"channel while peer is offline (try "+
+					"force closing it instead): %v", err)
+			}
 		}
 
 		// Keep the old behavior prior to 0.18.0 - when the user
@@ -2886,10 +2905,31 @@ func (r *rpcServer) CloseChannel(in *lnrpc.CloseChannelRequest,
 				feeRate)
 		}
 
-		updateChan, errChan = r.server.htlcSwitch.CloseLink(
-			chanPoint, contractcourt.CloseRegular, feeRate,
-			maxFee, deliveryScript,
-		)
+		if chanHasRbfCloser && !chanInSwitch {
+			rpcsLog.Infof("Bypassing Switch to do fee bump "+
+				"for ChannelPoint(%v)", chanPoint)
+
+			closeUpdates, err := r.server.AttemptRBFCloseUpdate(
+				updateStream.Context(), *chanPoint, feeRate,
+				deliveryScript,
+			)
+			if err != nil {
+				return fmt.Errorf("unable to do RBF close "+
+					"update: %w", err)
+			}
+
+			updateChan = closeUpdates.UpdateChan
+			errChan = closeUpdates.ErrChan
+		} else {
+			maxFee := chainfee.SatPerKVByte(
+				in.MaxFeePerVbyte * 1000,
+			).FeePerKWeight()
+			updateChan, errChan = r.server.htlcSwitch.CloseLink(
+				updateStream.Context(), chanPoint,
+				contractcourt.CloseRegular, feeRate, maxFee,
+				deliveryScript,
+			)
+		}
 	}
 
 	// If the user doesn't want to wait for the txid to come back then we
@@ -2911,6 +2951,7 @@ func (r *rpcServer) CloseChannel(in *lnrpc.CloseChannelRequest,
 			return err
 		}
 	}
+
 out:
 	for {
 		select {
@@ -2956,6 +2997,7 @@ out:
 				h, _ := chainhash.NewHash(closeUpdate.ClosingTxid)
 				rpcsLog.Infof("[closechannel] close completed: "+
 					"txid(%v)", h)
+
 				break out
 			}
 
@@ -3046,12 +3088,23 @@ func createRPCCloseUpdate(
 		}, nil
 
 	case *peer.PendingUpdate:
+		upd := &lnrpc.PendingUpdate{
+			Txid:        u.Txid,
+			OutputIndex: u.OutputIndex,
+		}
+
+		// Potentially set the optional fields that are only set for
+		// the new RBF close flow.
+		u.IsLocalCloseTx.WhenSome(func(isLocal bool) {
+			upd.LocalCloseTx = isLocal
+		})
+		u.FeePerVbyte.WhenSome(func(feeRate chainfee.SatPerVByte) {
+			upd.FeePerVbyte = int64(feeRate)
+		})
+
 		return &lnrpc.CloseStatusUpdate{
 			Update: &lnrpc.CloseStatusUpdate_ClosePending{
-				ClosePending: &lnrpc.PendingUpdate{
-					Txid:        u.Txid,
-					OutputIndex: u.OutputIndex,
-				},
+				ClosePending: upd,
 			},
 		}, nil
 	}

sample-lnd.conf

@@ -1411,6 +1411,9 @@
 ; Set to disable experimental endorsement signaling.
 ; protocol.no-experimental-endorsement=false
 
+; Set to disable support for RBF based coop close.
+; protocol.rbf-coop-close=false
+
 ; Set to handle messages of a particular type that falls outside of the
 ; custom message number range (i.e. 513 is onion messages). Note that you can
 ; set this option as many times as you want to support more than one custom

server.go

@@ -612,6 +612,17 @@ func newServer(cfg *Config, listenAddrs []net.Addr,
 			"aux controllers")
 	}
 
+	// For now, the RBF coop close flag and the taproot channel type cannot
+	// be used together.
+	//
+	// TODO(roasbeef): fix
+	if cfg.ProtocolOptions.RbfCoopClose &&
+		cfg.ProtocolOptions.TaprootChans {
+
+		return nil, fmt.Errorf("RBF coop close and taproot " +
+			"channels cannot be used together")
+	}
+
 	//nolint:ll
 	featureMgr, err := feature.NewManager(feature.Config{
 		NoTLVOnion:                cfg.ProtocolOptions.LegacyOnion(),
@@ -629,6 +640,7 @@ func newServer(cfg *Config, listenAddrs []net.Addr,
 		NoRouteBlinding:           cfg.ProtocolOptions.NoRouteBlinding(),
 		NoExperimentalEndorsement: cfg.ProtocolOptions.NoExperimentalEndorsement(),
 		NoQuiescence:              cfg.ProtocolOptions.NoQuiescence(),
+		NoRbfCoopClose:            !cfg.ProtocolOptions.RbfCoopClose,
 	})
 	if err != nil {
 		return nil, err
@@ -1292,7 +1304,9 @@ func newServer(cfg *Config, listenAddrs []net.Addr,
 		// Instruct the switch to close the channel.  Provide no close out
 		// delivery script or target fee per kw because user input is not
 		// available when the remote peer closes the channel.
-		s.htlcSwitch.CloseLink(chanPoint, closureType, 0, 0, nil)
+		s.htlcSwitch.CloseLink(
+			context.Background(), chanPoint, closureType, 0, 0, nil,
+		)
 	}
 
 	// We will use the following channel to reliably hand off contract
@@ -5413,3 +5427,88 @@ func (s *server) getStartingBeat() (*chainio.Beat, error) {
 
 	return beat, nil
 }
+
+// ChanHasRbfCoopCloser returns true if the channel as identifier by the channel
+// point has an active RBF chan closer.
+func (s *server) ChanHasRbfCoopCloser(peerPub *btcec.PublicKey,
+	chanPoint wire.OutPoint) bool {
+
+	pubBytes := peerPub.SerializeCompressed()
+
+	s.mu.RLock()
+	targetPeer, ok := s.peersByPub[string(pubBytes)]
+	s.mu.RUnlock()
+	if !ok {
+		return false
+	}
+
+	return targetPeer.ChanHasRbfCoopCloser(chanPoint)
+}
+
+// attemptCoopRbfFeeBump attempts to look up the active chan closer for a
+// channel given the outpoint. If found, we'll attempt to do a fee bump,
+// returning channels used for updates. If the channel isn't currently active
+// (p2p connection established), then his function will return an error.
+func (s *server) attemptCoopRbfFeeBump(ctx context.Context,
+	chanPoint wire.OutPoint, feeRate chainfee.SatPerKWeight,
+	deliveryScript lnwire.DeliveryAddress) (*peer.CoopCloseUpdates, error) {
+
+	// First, we'll attempt to look up the channel based on it's
+	// ChannelPoint.
+	channel, err := s.chanStateDB.FetchChannel(chanPoint)
+	if err != nil {
+		return nil, fmt.Errorf("unable to fetch channel: %w", err)
+	}
+
+	// From the channel, we can now get the pubkey of the peer, then use
+	// that to eventually get the chan closer.
+	peerPub := channel.IdentityPub.SerializeCompressed()
+
+	// Now that we have the peer pub, we can look up the peer itself.
+	s.mu.RLock()
+	targetPeer, ok := s.peersByPub[string(peerPub)]
+	s.mu.RUnlock()
+	if !ok {
+		return nil, fmt.Errorf("peer for ChannelPoint(%v) is "+
+			"not online", chanPoint)
+	}
+
+	closeUpdates, err := targetPeer.TriggerCoopCloseRbfBump(
+		ctx, chanPoint, feeRate, deliveryScript,
+	)
+	if err != nil {
+		return nil, fmt.Errorf("unable to trigger coop rbf fee bump: "+
+			"%w", err)
+	}
+
+	return closeUpdates, nil
+}
+
+// AttemptRBFCloseUpdate attempts to trigger a new RBF iteration for a co-op
+// close update. This route it to be used only if the target channel in question
+// is no longer active in the link. This can happen when we restart while we
+// already have done a single RBF co-op close iteration.
+func (s *server) AttemptRBFCloseUpdate(ctx context.Context,
+	chanPoint wire.OutPoint, feeRate chainfee.SatPerKWeight,
+	deliveryScript lnwire.DeliveryAddress) (*peer.CoopCloseUpdates, error) {
+
+	// If the channel is present in the switch, then the request should flow
+	// through the switch instead.
+	chanID := lnwire.NewChanIDFromOutPoint(chanPoint)
+	if _, err := s.htlcSwitch.GetLink(chanID); err == nil {
+		return nil, fmt.Errorf("ChannelPoint(%v) is active in link, "+
+			"invalid request", chanPoint)
+	}
+
+	// At this point, we know that the channel isn't present in the link, so
+	// we'll check to see if we have an entry in the active chan closer map.
+	updates, err := s.attemptCoopRbfFeeBump(
+		ctx, chanPoint, feeRate, deliveryScript,
+	)
+	if err != nil {
+		return nil, fmt.Errorf("unable to attempt coop rbf fee bump "+
+			"ChannelPoint(%v)", chanPoint)
+	}
+
+	return updates, nil
+}