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[BUG]: Lit Protocol Integration is Completely Broken #139

@Atharva0506

Description

@Atharva0506

Bug Description

The Lit Protocol integration is fully broken in both production and local development, blocking all invoice creation and rendering the app non-functional for every user.

On production (chainvoice.stability.nexus), the Lit Node Client fails during the initial handshake with InitError: Could not handshake with nodes after timeout, meaning no signing session can be established at all.

Locally, every node returns 402 Payment Required — because Lit's Datil V0 network was officially shut down on February 25, 2026 and now mandates paid Capacity Credit NFTs even for development use. When the app attempts to load multiple invoices, each iteration hits LitError: rate_limit_exceeded, stalling the entire invoice list.

The root cause is a deprecated, decommissioned dependency — not a configuration issue. Invoice signing and encryption cannot function on any version of the current stack.

📢 Confirmed by Lit Protocol officially: https://x.com/LitProtocol/status/2015882350778061069

Steps to Reproduce

  1. Navigate to /dashboard/create and connect your wallet.
  2. Fill out an invoice payload and attempt to submit it.
  3. Observe the InitError: Could not handshake with nodes after timeout in the console immediately.
  4. If initialization passes, observe the 402 Payment Required or LitError: rate_limit_exceeded upon clicking "Submit" or navigating to the Sent/Received invoice dashboards.

Logs and Screenshots

Image
🔴 402 Payment Required
 LitNodeClient: You must provide a capacityTokenId to avoid rate limits / payment blocks.
🔴 InitError: Could not handshake with nodes after timeout
  name: "InitError"
  message: "Error: Could not handshake with nodes after timeout.timeout config option which takes milliseconds."
🔴 Fetched Resource Failed
  Failed to load resource: net::ERR_CONNECTION_TIMED_OUT  .../web/handshake

Detailed Analysis / Research

I conducted deeper research on the Lit Protocol Datil shutdown and possible alternatives.

Full research document:
https://docs.google.com/document/d/1-iWskp9BwdFewd835Bg9DM1KgiUOdDcIEV4wBbJdZC0/edit?usp=sharing

Environment Details

  • OS: Windows 11
  • Browser: Chrome Version 145.0.7632.160

Impact

High - Major feature is broken

Code of Conduct

  • I have joined the Discord server and will post updates there
  • I have searched existing issues to avoid duplicates

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