Dual funding
Dual funding is a Lightning Network channel-opening protocol in which both peers can contribute inputs to the funding transaction, so the channel can open with a non-zero balance on both sides. It is the motivating use of the version 2 channel establishment flow in BOLT 2. Feature bits 28/29 advertise option_dual_fund.
The original Lightning open is single-funded: one peer pays the entire funding output and on-chain fees, and the other starts with no outbound liquidity until it receives payments or later adjusts the channel. Dual funding lets each peer put coins into the same 2-of-2 or Taproot funding output in one on-chain transaction.
Peers that support the feature exchange open_channel2 and accept_channel2, then build the funding transaction interactively with tx_add_input, tx_add_output, remove messages, and tx_complete, followed by commitment setup and tx_signatures. Because both sides may contribute inputs, the unconfirmed funding transaction can be fee-bumped with Replace by fee by repeating interactive construction at a higher feerate. Dual funding does not by itself change HTLC routing. Both peers need on-chain UTXOs. A peer with no coins cannot dual-fund.