What is a challenge transaction?

Modified on Tue, 30 Apr 2024 at 01:17 PM

In order to start a deposit or withdrawal in the LOBSTR wallet app or another service, asset issuers (anchors) require users to verify their Stellar wallet ownership by signing a special transaction called 'Challenge' transaction.


Signing the 'Challenge' transaction confirms that a user holds a Stellar wallet and can control this wallet. 


LOBSTR automatically signs 'Challenge' transactions for Stellar wallets not protected with multisig to provide the best user experience. 


For a Stellar wallet protected with multisig, asset issuers want to make sure that you have complete control over your Stellar wallet and require you to provide the signatures of your signers by signing the 'Challenge' transaction.



Once account ownership is verified, the asset issuer authorizes you to perform deposit and withdrawal operations or view the transfer history for this issuer's asset for a set time period.


As the account may change hands in time between two transfer transactions, you may need to sign the 'Challenge' transaction again the next time you want to deposit/withdraw an asset. 


'Challenge' transactions have an invalid sequence number (0) and thus cannot be executed on the Stellar network. 


Challenge transactions could be sent to your LOBSTR Vault account in the following use cases in LOBSTR wallet:

  • Depositing external assets with an anchor;
  • Withdrawing assets from an anchor;
  • Handling anchor KYC needs;
  • Viewing the history of deposits and withdrawals. 




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