A couple of features we are considering for the mercury statechain wallet/service and would be good to get comments/feedback on.

1.
In the current setup (https://github.com/commerceblock/mercury), deposits are free and permissionless (i.e. no authentication required to generate a shared key deposit addresses) and the mercury server fee (as a fixed percentage of the coin value) is collected in the withdrawal transaction as a UTXO paid to a fixed, specified bitcoin address. This has the advantage of making the deposit process low friction and user friendly, but has some disadvantages:

The withdrawal transaction fee output is typically a small fraction of the coin value and for the smallest coin values is close to the dust limit (i.e. these outputs may not be spendable in a high tx fee environment).
The on-chain mercury fee explicitly labels all withdrawn coins as mercury statechain withdrawals, which is a privacy concern for many users.

The alternative that mitigates these issues is to charge the fee up-front, via a LN invoice, before the shared key deposit address is generated. In this approach, a user would specify in the wallet that they wanted to deposit a specific amount into a statecoin, and instead of performing a shared  key generation with the server, would request a LN invoice for the withdrawal fee from the server, which would be returned to the wallet and displayed to the user.

The user would then copy this invoice (by C&P or QR code) into a third party LN wallet and pay the fee. A LN node running on the mercury server back end would then verify that the payment had been made, and enable the wallet to continue with the deposit keygen and deposit process. This coin would be labeled as ‘fee paid’ by the wallet and server, and not be subject to an on-chain fee payment on withdrawal.


2.
Withdrawal directly into LN channel.

Currently the wallet can send the coin to any type of bitcoin address (except Taproot - P2TR - which is a pending straightforward upgrade).
To create a dual funded channel (i.e. a channel where the counterparty provides BTC in addition to the mercury user) the withdrawal transaction process and co-signing with the server must support the handling of PSBTs. In this case, the withdrawal step would involve the mercury wallet co-signing (with the mercury server), a PSBT created by a LN wallet.

To enable this, the mercury wallet should be able to both create a PSBT on the withdrawal page, and then co-sign it with the server, and then send it to the channel counterparty out of band (or via the third party LN wallet/node), and import a PSBT created by the channel counterparty and sign it, and export and/or broadcast the fully signed PSBT.

This seems to be possible (i.e. paying directly to a dual funded channel opening tx from a third party wallet) with c-lightning and lnd via RPC, but I’m not aware of any LN wallet that would support this kind of thing. It has the potential to eliminate an on-chain tx, which could be valuable in a high-fee environment.