Oddbean new post about login | logout We intercept the payment, we don't have access to the user funds. You're also confusing trust and custody.
You only don’t have access to user funds because you choose not to access them, correct? It seems from your knowledge base that your software could change the payment details to access funds if you wanted. Anyway, sounds like a cool and useful solution but my point is that if you have control over funds it’s not self custodial. Perhaps “trust-minimized” would be a more accurate term. I haven’t dug into your source code so I might be totally wrong about whether your software has control over payment funds. Please let me know if I’m wrong about that.
Technically, any lightning node can intercept htlcs, it they can't access the funds because they don't have the preimage. So it's incorrect. There's an optional trust with using zero-conf channels (post interception). If users are choosing to use zero-conf channels, they trust the LSP not to double spend till confirmation. However, this is just one option of the LSP model.