diff --git a/cmd/tapd/main.go b/cmd/tapd/main.go
index 67b54036b..4b89dd9e6 100644
--- a/cmd/tapd/main.go
+++ b/cmd/tapd/main.go
@@ -67,7 +67,7 @@ func main() {
 	defer errQueue.Stop()
 
 	server, err := tapcfg.CreateServerFromConfig(
-		cfg, cfgLogger, shutdownInterceptor, errQueue.ChanIn(),
+		cfg, cfgLogger, shutdownInterceptor, false, errQueue.ChanIn(),
 	)
 	if err != nil {
 		err := fmt.Errorf("error creating server: %w", err)
diff --git a/config.go b/config.go
index 08166d68c..4337a1ab7 100644
--- a/config.go
+++ b/config.go
@@ -147,6 +147,11 @@ type Config struct {
 	// connecting to itself as a federation member.
 	RuntimeID int64
 
+	// EnableChannelFeatures indicates that tapd is running inside the
+	// Lightning Terminal daemon (litd) and can provide Taproot Asset
+	// channel functionality.
+	EnableChannelFeatures bool
+
 	ChainParams address.ChainParams
 
 	Lnd *lndclient.LndServices
diff --git a/go.mod b/go.mod
index c14bc825c..82852c4e3 100644
--- a/go.mod
+++ b/go.mod
@@ -28,7 +28,7 @@ require (
 	github.com/lib/pq v1.10.9
 	github.com/lightninglabs/aperture v0.1.21-beta.0.20230705004936-87bb996a4030
 	github.com/lightninglabs/lightning-node-connect/hashmailrpc v1.0.2
-	github.com/lightninglabs/lndclient v1.0.1-0.20240604150101-6b56ac87a4fa
+	github.com/lightninglabs/lndclient v1.0.1-0.20240607082608-4ce52a1a3f27
 	github.com/lightninglabs/neutrino/cache v1.1.2
 	github.com/lightningnetwork/lnd v0.18.0-beta.rc3.0.20240604145823-53dbd1ee66d0
 	github.com/lightningnetwork/lnd/cert v1.2.2
diff --git a/go.sum b/go.sum
index fb8def519..625c19f17 100644
--- a/go.sum
+++ b/go.sum
@@ -480,8 +480,8 @@ github.com/lightninglabs/lightning-node-connect v0.2.5-alpha h1:ZRVChwczFXK0CEbx
 github.com/lightninglabs/lightning-node-connect v0.2.5-alpha/go.mod h1:A9Pof9fETkH+F67BnOmrBDThPKstqp73wlImWOZvTXQ=
 github.com/lightninglabs/lightning-node-connect/hashmailrpc v1.0.2 h1:Er1miPZD2XZwcfE4xoS5AILqP1mj7kqnhbBSxW9BDxY=
 github.com/lightninglabs/lightning-node-connect/hashmailrpc v1.0.2/go.mod h1:antQGRDRJiuyQF6l+k6NECCSImgCpwaZapATth2Chv4=
-github.com/lightninglabs/lndclient v1.0.1-0.20240604150101-6b56ac87a4fa h1:O4ruYmvqRNm/1/8Crl4Y2fnGWSLmy43nxU12iuOnGBE=
-github.com/lightninglabs/lndclient v1.0.1-0.20240604150101-6b56ac87a4fa/go.mod h1:bxd2a15cIaW8KKcmOf9nNDI/GTxxj0upEYs1EIkttqw=
+github.com/lightninglabs/lndclient v1.0.1-0.20240607082608-4ce52a1a3f27 h1:vm8a13EzH2Qe6j4eZx+tHPeEVoNhJ7coihFPX6K2kco=
+github.com/lightninglabs/lndclient v1.0.1-0.20240607082608-4ce52a1a3f27/go.mod h1:bxd2a15cIaW8KKcmOf9nNDI/GTxxj0upEYs1EIkttqw=
 github.com/lightninglabs/neutrino v0.16.1-0.20240425105051-602843d34ffd h1:D8aRocHpoCv43hL8egXEMYyPmyOiefFHZ66338KQB2s=
 github.com/lightninglabs/neutrino v0.16.1-0.20240425105051-602843d34ffd/go.mod h1:x3OmY2wsA18+Kc3TSV2QpSUewOCiscw2mKpXgZv2kZk=
 github.com/lightninglabs/neutrino/cache v1.1.2 h1:C9DY/DAPaPxbFC+xNNEI/z1SJY9GS3shmlu5hIQ798g=
diff --git a/itest/tapd_harness.go b/itest/tapd_harness.go
index 85cf02dff..53ca06e01 100644
--- a/itest/tapd_harness.go
+++ b/itest/tapd_harness.go
@@ -309,7 +309,7 @@ func (hs *tapdHarness) start(expectErrExit bool) error {
 	)
 
 	hs.server, err = tapcfg.CreateServerFromConfig(
-		hs.clientCfg, cfgLogger, hs.ht.interceptor, mainErrChan,
+		hs.clientCfg, cfgLogger, hs.ht.interceptor, false, mainErrChan,
 	)
 	if err != nil {
 		return fmt.Errorf("could not create tapd server: %w", err)
diff --git a/psbt_channel_funder.go b/psbt_channel_funder.go
index e359276ea..922284b32 100644
--- a/psbt_channel_funder.go
+++ b/psbt_channel_funder.go
@@ -13,6 +13,12 @@ import (
 	"github.com/lightningnetwork/lnd/routing/route"
 )
 
+const (
+	// CustomChannelRemoteReserve is the custom channel minimum remote
+	// reserve that we'll use for our channels.
+	CustomChannelRemoteReserve = 1062
+)
+
 // LndPbstChannelFunder is an implementation of the tapchannel.ChannelFunder
 // interface that uses lnd to carry out the PSBT funding process.
 type LndPbstChannelFunder struct {
@@ -92,8 +98,8 @@ func (l *LndPbstChannelFunder) OpenChannel(ctx context.Context,
 	// taproot channel, that uses the PSBT funding flow.
 	taprootCommitType := lnrpc.CommitmentType_SIMPLE_TAPROOT
 	openChanStream, errChan, err := l.lnd.Client.OpenChannelStream(
-		ctx, route.NewVertex(&req.PeerPub), req.ChanAmt, 0, true,
-		lndclient.WithCommitmentType(&taprootCommitType),
+		ctx, route.NewVertex(&req.PeerPub), req.ChanAmt, req.PushAmt,
+		true, lndclient.WithCommitmentType(&taprootCommitType),
 		lndclient.WithFundingShim(&lnrpc.FundingShim{
 			Shim: &lnrpc.FundingShim_PsbtShim{
 				PsbtShim: &lnrpc.PsbtShim{
@@ -103,6 +109,7 @@ func (l *LndPbstChannelFunder) OpenChannel(ctx context.Context,
 				},
 			},
 		}),
+		lndclient.WithRemoteReserve(CustomChannelRemoteReserve),
 	)
 	if err != nil {
 		return nil, fmt.Errorf("unable to open channel with "+
diff --git a/rpcserver.go b/rpcserver.go
index 2f6b4ac74..edbe2156f 100644
--- a/rpcserver.go
+++ b/rpcserver.go
@@ -17,6 +17,7 @@ import (
 
 	"github.com/btcsuite/btcd/btcec/v2"
 	"github.com/btcsuite/btcd/btcec/v2/schnorr"
+	"github.com/btcsuite/btcd/btcutil"
 	"github.com/btcsuite/btcd/btcutil/psbt"
 	"github.com/btcsuite/btcd/chaincfg/chainhash"
 	"github.com/btcsuite/btcd/wire"
@@ -6394,6 +6395,14 @@ func (r *rpcServer) FundChannel(ctx context.Context,
 	req *tchrpc.FundChannelRequest) (*tchrpc.FundChannelResponse,
 	error) {
 
+	// If we're not running inside litd, we cannot offer this functionality.
+	if !r.cfg.EnableChannelFeatures {
+		return nil, fmt.Errorf("the Taproot Asset channel " +
+			"functionality is only available when running inside " +
+			"Lightning Terminal daemon (litd), with lnd and tapd " +
+			"both running in 'integrated' mode")
+	}
+
 	peerPub, err := btcec.ParsePubKey(req.PeerPubkey)
 	if err != nil {
 		return nil, fmt.Errorf("error parsing peer pubkey: %w", err)
@@ -6414,6 +6423,7 @@ func (r *rpcServer) FundChannel(ctx context.Context,
 		PeerPub:     *peerPub,
 		AssetAmount: req.AssetAmount,
 		FeeRate:     chainfee.SatPerVByte(req.FeeRateSatPerVbyte),
+		PushAmount:  btcutil.Amount(req.PushSat),
 	}
 	copy(fundReq.AssetID[:], req.AssetId)
 
diff --git a/tapcfg/server.go b/tapcfg/server.go
index 7472860d7..082aebda2 100644
--- a/tapcfg/server.go
+++ b/tapcfg/server.go
@@ -38,7 +38,7 @@ type databaseBackend interface {
 // NOTE: The RPCConfig and SignalInterceptor fields must be set by the caller
 // after generating the server config.
 func genServerConfig(cfg *Config, cfgLogger btclog.Logger,
-	lndServices *lndclient.LndServices,
+	lndServices *lndclient.LndServices, enableChannelFeatures bool,
 	mainErrChan chan<- error) (*tap.Config, error) {
 
 	var err error
@@ -452,10 +452,13 @@ func genServerConfig(cfg *Config, cfgLogger btclog.Logger,
 	}
 
 	return &tap.Config{
-		DebugLevel:   cfg.DebugLevel,
-		RuntimeID:    runtimeID,
-		Lnd:          lndServices,
-		ChainParams:  address.ParamsForChain(cfg.ActiveNetParams.Name),
+		DebugLevel:            cfg.DebugLevel,
+		RuntimeID:             runtimeID,
+		EnableChannelFeatures: enableChannelFeatures,
+		Lnd:                   lndServices,
+		ChainParams: address.ParamsForChain(
+			cfg.ActiveNetParams.Name,
+		),
 		ReOrgWatcher: reOrgWatcher,
 		AssetMinter: tapgarden.NewChainPlanter(tapgarden.PlanterConfig{
 			GardenKit: tapgarden.GardenKit{
@@ -530,7 +533,7 @@ func genServerConfig(cfg *Config, cfgLogger btclog.Logger,
 // CreateServerFromConfig creates a new Taproot Asset server from the given CLI
 // config.
 func CreateServerFromConfig(cfg *Config, cfgLogger btclog.Logger,
-	shutdownInterceptor signal.Interceptor,
+	shutdownInterceptor signal.Interceptor, enableChannelFeatures bool,
 	mainErrChan chan<- error) (*tap.Server, error) {
 
 	// Given the config above, grab the TLS config which includes the set
@@ -556,7 +559,8 @@ func CreateServerFromConfig(cfg *Config, cfgLogger btclog.Logger,
 	cfgLogger.Infof("lnd connection initialized")
 
 	serverCfg, err := genServerConfig(
-		cfg, cfgLogger, &lndConn.LndServices, mainErrChan,
+		cfg, cfgLogger, &lndConn.LndServices, enableChannelFeatures,
+		mainErrChan,
 	)
 	if err != nil {
 		return nil, fmt.Errorf("unable to generate server config: %w",
@@ -590,11 +594,11 @@ func CreateServerFromConfig(cfg *Config, cfgLogger btclog.Logger,
 
 // ConfigureSubServer updates a Taproot Asset server with the given CLI config.
 func ConfigureSubServer(srv *tap.Server, cfg *Config, cfgLogger btclog.Logger,
-	lndServices *lndclient.LndServices,
+	lndServices *lndclient.LndServices, litdIntegrated bool,
 	mainErrChan chan<- error) error {
 
 	serverCfg, err := genServerConfig(
-		cfg, cfgLogger, lndServices, mainErrChan,
+		cfg, cfgLogger, lndServices, litdIntegrated, mainErrChan,
 	)
 	if err != nil {
 		return fmt.Errorf("unable to generate server config: %w", err)
diff --git a/tapchannel/allocation.go b/tapchannel/allocation.go
index a752112e3..16edea0d8 100644
--- a/tapchannel/allocation.go
+++ b/tapchannel/allocation.go
@@ -3,6 +3,7 @@ package tapchannel
 import (
 	"bytes"
 	"fmt"
+	"net/url"
 	"sort"
 
 	"github.com/btcsuite/btcd/btcec/v2"
@@ -144,6 +145,10 @@ type Allocation struct {
 	// OutputCommitment is the taproot output commitment that is set after
 	// fully distributing the coins and creating the asset and TAP trees.
 	OutputCommitment *commitment.TapCommitment
+
+	// ProofDeliveryAddress is the address the proof courier should use to
+	// upload the proof for this allocation.
+	ProofDeliveryAddress *url.URL
 }
 
 // tapscriptSibling returns the tapscript sibling preimage from the non-asset
@@ -438,6 +443,7 @@ func DistributeCoins(inputs []*proof.Proof, allocations []*Allocation,
 				return nil, err
 			}
 
+			deliveryAddr := a.ProofDeliveryAddress
 			vOut := &tappsbt.VOutput{
 				Amount:                       allocating,
 				AssetVersion:                 a.AssetVersion,
@@ -447,6 +453,7 @@ func DistributeCoins(inputs []*proof.Proof, allocations []*Allocation,
 				AnchorOutputInternalKey:      a.InternalKey,
 				AnchorOutputTapscriptSibling: sibling,
 				ScriptKey:                    a.ScriptKey,
+				ProofDeliveryAddress:         deliveryAddr,
 			}
 			p.packet.Outputs = append(p.packet.Outputs, vOut)
 
diff --git a/tapchannel/aux_closer.go b/tapchannel/aux_closer.go
index affe412f4..8b36a8a4c 100644
--- a/tapchannel/aux_closer.go
+++ b/tapchannel/aux_closer.go
@@ -102,6 +102,19 @@ func createCloseAlloc(isLocal, isInitiator bool, closeAsset *asset.Asset,
 		return nil, fmt.Errorf("no script key for asset %v", assetID)
 	}
 
+	var proofDeliveryUrl *url.URL
+	err := lfn.MapOptionZ(
+		shutdownMsg.ProofDeliveryAddr.ValOpt(), func(u []byte) error {
+			var err error
+			proofDeliveryUrl, err = url.Parse(string(u))
+			return err
+		},
+	)
+	if err != nil {
+		return nil, fmt.Errorf("unable to decode proof delivery "+
+			"address: %w", err)
+	}
+
 	return &Allocation{
 		Type: func() AllocationType {
 			if isLocal {
@@ -110,13 +123,14 @@ func createCloseAlloc(isLocal, isInitiator bool, closeAsset *asset.Asset,
 
 			return CommitAllocationToRemote
 		}(),
-		SplitRoot:           isInitiator,
-		InternalKey:         shutdownMsg.AssetInternalKey.Val,
-		ScriptKey:           asset.NewScriptKey(&scriptKey),
-		Amount:              closeAsset.Amount,
-		AssetVersion:        asset.V0,
-		BtcAmount:           tapsend.DummyAmtSats,
-		SortTaprootKeyBytes: sortKeyBytes,
+		SplitRoot:            isInitiator,
+		InternalKey:          shutdownMsg.AssetInternalKey.Val,
+		ScriptKey:            asset.NewScriptKey(&scriptKey),
+		Amount:               closeAsset.Amount,
+		AssetVersion:         asset.V0,
+		BtcAmount:            tapsend.DummyAmtSats,
+		SortTaprootKeyBytes:  sortKeyBytes,
+		ProofDeliveryAddress: proofDeliveryUrl,
 	}, nil
 }
 
@@ -325,14 +339,6 @@ func (a *AuxChanCloser) AuxCloseOutputs(
 		return none, fmt.Errorf("unable to distribute coins: %w", err)
 	}
 
-	// For each vPkt, we'll also go ahead and add the default proof courier
-	// addr to them.
-	for _, vPacket := range vPackets {
-		for _, vOut := range vPacket.Outputs {
-			vOut.ProofDeliveryAddress = a.cfg.DefaultCourierAddr
-		}
-	}
-
 	// With the vPackets created we'll now prepare all the split
 	// information encoded in the vPackets.
 	fundingScriptTree := NewFundingScriptTree()
@@ -493,16 +499,16 @@ func (a *AuxChanCloser) ShutdownBlob(
 		return none, err
 	}
 
-	// Next, we'll collect all the asset IDs that we own in this channel.
-	assetIDs := lfn.Map(func(o *tapchannelmsg.AssetOutput) asset.ID {
-		return o.AssetID.Val
-	}, commitState.LocalAssets.Val.Outputs)
+	// Next, we'll collect all the assets that we own in this channel.
+	assets := commitState.LocalAssets.Val.Outputs
 
 	// Now that we have all the asset IDs, we'll query for a new key for
 	// each of them which we'll use as both the internal key and the script
 	// key.
 	scriptKeys := make(tapchannelmsg.ScriptKeyMap)
-	for _, assetID := range assetIDs {
+	for idx := range assets {
+		channelAsset := assets[idx]
+
 		newKey, err := a.cfg.AddrBook.NextScriptKey(
 			ctx, asset.TaprootAssetsKeyFamily,
 		)
@@ -510,15 +516,29 @@ func (a *AuxChanCloser) ShutdownBlob(
 			return none, err
 		}
 
-		scriptKeys[assetID] = *newKey.PubKey
+		// We now add the a
+		// TODO(guggero): This only works if there's only a single asset
+		// in the channel. We need to extend this to support multiple
+		// assets.
+		_, err = a.cfg.AddrBook.NewAddressWithKeys(
+			ctx, channelAsset.AssetID.Val, channelAsset.Amount.Val,
+			newKey, newInternalKey, nil, *a.cfg.DefaultCourierAddr,
+		)
+		if err != nil {
+			return none, fmt.Errorf("error adding new address: %w",
+				err)
+		}
+
+		scriptKeys[channelAsset.AssetID.Val] = *newKey.PubKey
 	}
 
 	// Finally, we'll map the extra shutdown info to a TLV record map we
 	// can send to lnd to have included.
 	shutdownRecord := tapchannelmsg.NewAuxShutdownMsg(
 		&btcInternalKey, newInternalKey.PubKey, scriptKeys,
+		a.cfg.DefaultCourierAddr,
 	)
-	records, err := tlv.RecordsToMap(shutdownRecord.Records())
+	records, err := tlv.RecordsToMap(shutdownRecord.EncodeRecords())
 	if err != nil {
 		return none, err
 	}
diff --git a/tapchannel/aux_funding_controller.go b/tapchannel/aux_funding_controller.go
index 6b572fe5a..c60a054e7 100644
--- a/tapchannel/aux_funding_controller.go
+++ b/tapchannel/aux_funding_controller.go
@@ -72,6 +72,9 @@ type OpenChanReq struct {
 	// CPFP with the channel anchor outputs.
 	ChanAmt btcutil.Amount
 
+	// PushAmt is the amount of BTC to push to the remote peer.
+	PushAmt btcutil.Amount
+
 	// PeerPub is the identity public key of the remote peer we wish to
 	// open the channel with.
 	PeerPub btcec.PublicKey
@@ -290,6 +293,8 @@ type pendingAssetFunding struct {
 
 	amt uint64
 
+	pushAmt btcutil.Amount
+
 	inputProofs []*proof.Proof
 
 	feeRate chainfee.SatPerVByte
@@ -946,6 +951,7 @@ func (f *FundingController) completeChannelFunding(ctx context.Context,
 	// flow with lnd.
 	fundingReq := OpenChanReq{
 		ChanAmt: 100_000,
+		PushAmt: fundingState.pushAmt,
 		PeerPub: fundingState.peerPub,
 		TempPID: fundingState.pid,
 	}
@@ -1173,6 +1179,7 @@ func (f *FundingController) chanFunder() {
 				pid:                    tempPID,
 				initiator:              true,
 				amt:                    fundReq.AssetAmount,
+				pushAmt:                fundReq.PushAmount,
 				feeRate:                fundReq.FeeRate,
 				fundingAckChan:         make(chan bool, 1),
 				fundingFinalizedSignal: make(chan struct{}),
@@ -1602,6 +1609,10 @@ type FundReq struct {
 	// FeeRate is the fee rate that we'll use to fund the channel.
 	FeeRate chainfee.SatPerVByte
 
+	// PushAmount is the amount of satoshis that we'll push to the remote
+	// party.
+	PushAmount btcutil.Amount
+
 	ctx      context.Context
 	respChan chan *wire.OutPoint
 	errChan  chan error
diff --git a/tapchannel/commitment.go b/tapchannel/commitment.go
index cef85f788..9e07e6959 100644
--- a/tapchannel/commitment.go
+++ b/tapchannel/commitment.go
@@ -401,8 +401,16 @@ func SanityCheckAmounts(ourBalance, theirBalance btcutil.Amount,
 			"anchors", chanType)
 	}
 
-	wantLocalAnchor := ourAssetBalance > 0 || numHTLCs > 0
-	wantRemoteAnchor := theirAssetBalance > 0 || numHTLCs > 0
+	// Due to push amounts on channel open or pure BTC payments, we can have
+	// a BTC balance even if the asset balance is zero.
+	ourBtcNonDust := ourBalance >= dustLimit
+	theirBtcNonDust := theirBalance >= dustLimit
+
+	// So we want an anchor if we either have assets or non-dust BTC or
+	// any in-flight HTLCs.
+	wantLocalAnchor := ourAssetBalance > 0 || ourBtcNonDust || numHTLCs > 0
+	wantRemoteAnchor := theirAssetBalance > 0 || theirBtcNonDust ||
+		numHTLCs > 0
 
 	return wantLocalAnchor, wantRemoteAnchor, nil
 }
@@ -750,7 +758,7 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 
 	// We've asserted that we have a non-dust BTC balance if we have an
 	// asset balance before, so we can just check the asset balance here.
-	if ourAssetBalance > 0 {
+	if ourAssetBalance > 0 || ourBalance > 0 {
 		toLocalScript, err := lnwallet.CommitScriptToSelf(
 			chanType, initiator, keys.ToLocalKey,
 			keys.RevocationKey, uint32(localChanCfg.CsvDelay),
@@ -769,7 +777,7 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 				"sibling: %w", err)
 		}
 
-		addAllocation(&Allocation{
+		allocation := &Allocation{
 			Type:           CommitAllocationToLocal,
 			Amount:         ourAssetBalance,
 			AssetVersion:   asset.V1,
@@ -783,10 +791,29 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 			SortTaprootKeyBytes: schnorr.SerializePubKey(
 				toLocalTree.TaprootKey,
 			),
-		})
+		}
+
+		// If there are no assets, only BTC (for example due to a push
+		// amount), the allocation looks simpler.
+		if ourAssetBalance == 0 {
+			allocation = &Allocation{
+				Type:           AllocationTypeNoAssets,
+				BtcAmount:      ourBalance,
+				InternalKey:    toLocalTree.InternalKey,
+				NonAssetLeaves: sibling,
+				ScriptKey: asset.NewScriptKey(
+					toLocalTree.TaprootKey,
+				),
+				SortTaprootKeyBytes: schnorr.SerializePubKey(
+					toLocalTree.TaprootKey,
+				),
+			}
+		}
+
+		addAllocation(allocation)
 	}
 
-	if theirAssetBalance > 0 {
+	if theirAssetBalance > 0 || theirBalance > 0 {
 		toRemoteScript, _, err := lnwallet.CommitScriptToRemote(
 			chanType, initiator, keys.ToRemoteKey, leaseExpiry,
 			lfn.None[txscript.TapLeaf](),
@@ -804,7 +831,7 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 				"sibling: %w", err)
 		}
 
-		addAllocation(&Allocation{
+		allocation := &Allocation{
 			Type:           CommitAllocationToRemote,
 			Amount:         theirAssetBalance,
 			AssetVersion:   asset.V1,
@@ -818,7 +845,26 @@ func addCommitmentOutputs(chanType channeldb.ChannelType, localChanCfg,
 			SortTaprootKeyBytes: schnorr.SerializePubKey(
 				toRemoteTree.TaprootKey,
 			),
-		})
+		}
+
+		// If there are no assets, only BTC (for example due to a push
+		// amount), the allocation looks simpler.
+		if theirAssetBalance == 0 {
+			allocation = &Allocation{
+				Type:           AllocationTypeNoAssets,
+				BtcAmount:      theirBalance,
+				InternalKey:    toRemoteTree.InternalKey,
+				NonAssetLeaves: sibling,
+				ScriptKey: asset.NewScriptKey(
+					toRemoteTree.TaprootKey,
+				),
+				SortTaprootKeyBytes: schnorr.SerializePubKey(
+					toRemoteTree.TaprootKey,
+				),
+			}
+		}
+
+		addAllocation(allocation)
 	}
 
 	return nil
diff --git a/tapchannel/log.go b/tapchannel/log.go
index e7c6a2a30..c87da7dfd 100644
--- a/tapchannel/log.go
+++ b/tapchannel/log.go
@@ -17,7 +17,7 @@ var log = btclog.Disabled
 // to 4 levels, so it can safely be used for things that contain an MS-SMT tree.
 var limitSpewer = &spew.ConfigState{
 	Indent:   "  ",
-	MaxDepth: 4,
+	MaxDepth: 5,
 }
 
 // DisableLog disables all library log output.  Logging output is disabled
diff --git a/tapchannelmsg/records.go b/tapchannelmsg/records.go
index e536f07a7..e593c49bc 100644
--- a/tapchannelmsg/records.go
+++ b/tapchannelmsg/records.go
@@ -5,6 +5,7 @@ import (
 	"errors"
 	"fmt"
 	"io"
+	"net/url"
 
 	"github.com/btcsuite/btcd/btcec/v2"
 	"github.com/btcsuite/btcd/txscript"
@@ -69,6 +70,11 @@ type (
 	// ScriptKeysShutdownType is the type alias for the TLV type that is
 	// used to encode the script keys of the shutdown record on the wire.
 	ScriptKeysShutdownType = tlv.TlvType65541
+
+	// ProofDeliveryAddrShutdownType is the type alias for the TLV type that
+	// is used to encode the proof delivery address of the shutdown record
+	// on the wire.
+	ProofDeliveryAddrShutdownType = tlv.TlvType65542
 )
 
 // OpenChannel is a record that represents the capacity information related to
@@ -1795,12 +1801,31 @@ type AuxShutdownMsg struct {
 	// ScriptKeys maps asset IDs to script keys to be used to send the
 	// assets to the sending party in the co-op close transaction.
 	ScriptKeys tlv.RecordT[ScriptKeysShutdownType, ScriptKeyMap]
+
+	// ProofDeliveryAddr is an optional type that contains the delivery
+	// address for the proofs of the co-op close outputs of the local node.
+	ProofDeliveryAddr tlv.OptionalRecordT[
+		ProofDeliveryAddrShutdownType, []byte,
+	]
 }
 
 // NewAuxShutdownMsg creates a new AuxShutdownMsg with the given internal key
 // and script key map.
 func NewAuxShutdownMsg(btcInternalKey, assetInternalKey *btcec.PublicKey,
-	scriptKeys ScriptKeyMap) *AuxShutdownMsg {
+	scriptKeys ScriptKeyMap, proofDeliveryAddr *url.URL) *AuxShutdownMsg {
+
+	var deliveryAddr tlv.OptionalRecordT[
+		ProofDeliveryAddrShutdownType, []byte,
+	]
+	if proofDeliveryAddr != nil {
+		deliveryAddrBytes := []byte(proofDeliveryAddr.String())
+		rec := tlv.NewPrimitiveRecord[ProofDeliveryAddrShutdownType](
+			deliveryAddrBytes,
+		)
+		deliveryAddr = tlv.SomeRecordT[ProofDeliveryAddrShutdownType](
+			rec,
+		)
+	}
 
 	return &AuxShutdownMsg{
 		BtcInternalKey: tlv.NewPrimitiveRecord[BtcKeyShutdownType](
@@ -1812,12 +1837,31 @@ func NewAuxShutdownMsg(btcInternalKey, assetInternalKey *btcec.PublicKey,
 		ScriptKeys: tlv.NewRecordT[ScriptKeysShutdownType](
 			scriptKeys,
 		),
+		ProofDeliveryAddr: deliveryAddr,
+	}
+}
+
+// EncodeRecords returns the records that make up the AuxShutdownMsg for
+// encoding.
+func (a *AuxShutdownMsg) EncodeRecords() []tlv.Record {
+	records := []tlv.Record{
+		a.BtcInternalKey.Record(),
+		a.AssetInternalKey.Record(),
+		a.ScriptKeys.Record(),
 	}
+
+	a.ProofDeliveryAddr.WhenSome(
+		func(r tlv.RecordT[ProofDeliveryAddrShutdownType, []byte]) {
+			records = append(records, r.Record())
+		},
+	)
+
+	return records
 }
 
 // Encode serializes the AuxShutdownMsg to the given io.Writer.
 func (a *AuxShutdownMsg) Encode(w io.Writer) error {
-	tlvStream, err := tlv.NewStream(a.Records()...)
+	tlvStream, err := tlv.NewStream(a.EncodeRecords()...)
 	if err != nil {
 		return err
 	}
@@ -1827,25 +1871,30 @@ func (a *AuxShutdownMsg) Encode(w io.Writer) error {
 
 // Decode deserializes the AuxShutdownMsg from the given io.Reader.
 func (a *AuxShutdownMsg) Decode(r io.Reader) error {
-	tlvStream, err := tlv.NewStream(a.Records()...)
+	deliveryAddr := a.ProofDeliveryAddr.Zero()
+
+	records := []tlv.Record{
+		a.BtcInternalKey.Record(),
+		a.AssetInternalKey.Record(),
+		a.ScriptKeys.Record(),
+		deliveryAddr.Record(),
+	}
+
+	tlvStream, err := tlv.NewStream(records...)
 	if err != nil {
 		return err
 	}
 
-	if _, err := tlvStream.DecodeWithParsedTypesP2P(r); err != nil {
+	tlvs, err := tlvStream.DecodeWithParsedTypesP2P(r)
+	if err != nil {
 		return err
 	}
 
-	return nil
-}
-
-// Records returns a slice of tlv.Record that represents the AuxShutdownMsg.
-func (a *AuxShutdownMsg) Records() []tlv.Record {
-	return []tlv.Record{
-		a.BtcInternalKey.Record(),
-		a.AssetInternalKey.Record(),
-		a.ScriptKeys.Record(),
+	if _, ok := tlvs[deliveryAddr.TlvType()]; ok {
+		a.ProofDeliveryAddr = tlv.SomeRecordT(deliveryAddr)
 	}
+
+	return nil
 }
 
 // DecodeAuxShutdownMsg deserializes a AuxShutdownMsg from the given blob.
diff --git a/tapchannelmsg/records_test.go b/tapchannelmsg/records_test.go
index 234596000..e7989342d 100644
--- a/tapchannelmsg/records_test.go
+++ b/tapchannelmsg/records_test.go
@@ -3,6 +3,7 @@ package tapchannelmsg
 import (
 	"bytes"
 	"encoding/hex"
+	"net/url"
 	"os"
 	"path/filepath"
 	"strings"
@@ -438,15 +439,42 @@ func TestAuxShutdownMsg(t *testing.T) {
 		testScriptKeys[[32]byte{byte(i)}] = *test.RandPubKey(t)
 	}
 
-	testShutdownMsg := NewAuxShutdownMsg(
-		testBtcInternalKey, testAssetInternalKey, testScriptKeys,
-	)
+	dummyURL, err := url.Parse("https://example.com")
+	require.NoError(t, err)
+
+	testCases := []struct {
+		name     string
+		shutdown *AuxShutdownMsg
+	}{
+		{
+			name: "AuxShutdownMsg with no URL",
+			shutdown: NewAuxShutdownMsg(
+				testBtcInternalKey, testAssetInternalKey,
+				testScriptKeys, nil,
+			),
+		},
+		{
+			name: "AuxShutdownMsg with URL",
+			shutdown: NewAuxShutdownMsg(
+				testBtcInternalKey, testAssetInternalKey,
+				testScriptKeys, dummyURL,
+			),
+		},
+	}
 
-	var shutdownBuffer bytes.Buffer
-	require.NoError(t, testShutdownMsg.Encode(&shutdownBuffer))
+	for _, tc := range testCases {
+		t.Run(tc.name, func(t *testing.T) {
+			// Serialize the AuxShutdownMsg and then deserialize it
+			// again.
+			var b bytes.Buffer
+			err := tc.shutdown.Encode(&b)
+			require.NoError(t, err)
 
-	var newShutdownMsg AuxShutdownMsg
-	require.NoError(t, newShutdownMsg.Decode(&shutdownBuffer))
+			newShutdownMsg := &AuxShutdownMsg{}
+			err = newShutdownMsg.Decode(&b)
+			require.NoError(t, err)
 
-	require.Equal(t, *testShutdownMsg, newShutdownMsg)
+			require.Equal(t, tc.shutdown, newShutdownMsg)
+		})
+	}
 }
diff --git a/taprpc/tapchannelrpc/tapchannel.pb.go b/taprpc/tapchannelrpc/tapchannel.pb.go
index 7c5defa2b..baee599d1 100644
--- a/taprpc/tapchannelrpc/tapchannel.pb.go
+++ b/taprpc/tapchannelrpc/tapchannel.pb.go
@@ -35,6 +35,12 @@ type FundChannelRequest struct {
 	PeerPubkey []byte `protobuf:"bytes,3,opt,name=peer_pubkey,json=peerPubkey,proto3" json:"peer_pubkey,omitempty"`
 	// The channel funding fee rate in sat/vByte.
 	FeeRateSatPerVbyte uint32 `protobuf:"varint,4,opt,name=fee_rate_sat_per_vbyte,json=feeRateSatPerVbyte,proto3" json:"fee_rate_sat_per_vbyte,omitempty"`
+	// The number of satoshis to give the remote side as part of the initial
+	// commitment state. This is equivalent to first opening a channel and then
+	// sending the remote party funds, but all done in one step. Therefore, this
+	// is equivalent to a donation to the remote party, unless they reimburse
+	// the funds in another way (outside the protocol).
+	PushSat int64 `protobuf:"varint,5,opt,name=push_sat,json=pushSat,proto3" json:"push_sat,omitempty"`
 }
 
 func (x *FundChannelRequest) Reset() {
@@ -97,6 +103,13 @@ func (x *FundChannelRequest) GetFeeRateSatPerVbyte() uint32 {
 	return 0
 }
 
+func (x *FundChannelRequest) GetPushSat() int64 {
+	if x != nil {
+		return x.PushSat
+	}
+	return 0
+}
+
 type FundChannelResponse struct {
 	state         protoimpl.MessageState
 	sizeCache     protoimpl.SizeCache
@@ -335,7 +348,7 @@ var file_tapchannelrpc_tapchannel_proto_rawDesc = []byte{
 	0x0a, 0x1e, 0x74, 0x61, 0x70, 0x63, 0x68, 0x61, 0x6e, 0x6e, 0x65, 0x6c, 0x72, 0x70, 0x63, 0x2f,
 	0x74, 0x61, 0x70, 0x63, 0x68, 0x61, 0x6e, 0x6e, 0x65, 0x6c, 0x2e, 0x70, 0x72, 0x6f, 0x74, 0x6f,
 	0x12, 0x0d, 0x74, 0x61, 0x70, 0x63, 0x68, 0x61, 0x6e, 0x6e, 0x65, 0x6c, 0x72, 0x70, 0x63, 0x22,
-	0xa7, 0x01, 0x0a, 0x12, 0x46, 0x75, 0x6e, 0x64, 0x43, 0x68, 0x61, 0x6e, 0x6e, 0x65, 0x6c, 0x52,
+	0xc2, 0x01, 0x0a, 0x12, 0x46, 0x75, 0x6e, 0x64, 0x43, 0x68, 0x61, 0x6e, 0x6e, 0x65, 0x6c, 0x52,
 	0x65, 0x71, 0x75, 0x65, 0x73, 0x74, 0x12, 0x21, 0x0a, 0x0c, 0x61, 0x73, 0x73, 0x65, 0x74, 0x5f,
 	0x61, 0x6d, 0x6f, 0x75, 0x6e, 0x74, 0x18, 0x01, 0x20, 0x01, 0x28, 0x04, 0x52, 0x0b, 0x61, 0x73,
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@@ -345,64 +358,65 @@ var file_tapchannelrpc_tapchannel_proto_rawDesc = []byte{
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 }
 
 var (
diff --git a/taprpc/tapchannelrpc/tapchannel.proto b/taprpc/tapchannelrpc/tapchannel.proto
index ec071f25e..d2871c074 100644
--- a/taprpc/tapchannelrpc/tapchannel.proto
+++ b/taprpc/tapchannelrpc/tapchannel.proto
@@ -36,6 +36,13 @@ message FundChannelRequest {
 
     // The channel funding fee rate in sat/vByte.
     uint32 fee_rate_sat_per_vbyte = 4;
+
+    // The number of satoshis to give the remote side as part of the initial
+    // commitment state. This is equivalent to first opening a channel and then
+    // sending the remote party funds, but all done in one step. Therefore, this
+    // is equivalent to a donation to the remote party, unless they reimburse
+    // the funds in another way (outside the protocol).
+    int64 push_sat = 5;
 }
 
 message FundChannelResponse {
diff --git a/taprpc/tapchannelrpc/tapchannel.swagger.json b/taprpc/tapchannelrpc/tapchannel.swagger.json
index eef198030..d8f118ebb 100644
--- a/taprpc/tapchannelrpc/tapchannel.swagger.json
+++ b/taprpc/tapchannelrpc/tapchannel.swagger.json
@@ -99,6 +99,14 @@
             "required": false,
             "type": "integer",
             "format": "int64"
+          },
+          {
+            "name": "push_sat",
+            "description": "The number of satoshis to give the remote side as part of the initial\ncommitment state. This is equivalent to first opening a channel and then\nsending the remote party funds, but all done in one step. Therefore, this\nis equivalent to a donation to the remote party, unless they reimburse\nthe funds in another way (outside the protocol).",
+            "in": "query",
+            "required": false,
+            "type": "string",
+            "format": "int64"
           }
         ],
         "tags": [
diff --git a/tapsend/send.go b/tapsend/send.go
index c17ff82e4..f0333380e 100644
--- a/tapsend/send.go
+++ b/tapsend/send.go
@@ -515,7 +515,7 @@ func PrepareOutputAssets(ctx context.Context, vPkt *tappsbt.VPacket) error {
 		// Sum the total amount of the input assets.
 		inputsAmountSum := uint64(0)
 		for idx := range inputs {
-			input := inputs[idx]
+			in := inputs[idx]
 
 			// At the moment, we need to ensure that all inputs have
 			// the same asset ID. We've already checked that above,
@@ -525,7 +525,7 @@ func PrepareOutputAssets(ctx context.Context, vPkt *tappsbt.VPacket) error {
 					"must have the same asset ID")
 			}
 
-			inputsAmountSum += input.Asset().Amount
+			inputsAmountSum += in.Asset().Amount
 		}
 
 		// At this point we know that each input has the same asset ID
@@ -541,16 +541,20 @@ func PrepareOutputAssets(ctx context.Context, vPkt *tappsbt.VPacket) error {
 		vOut.Asset.Amount = inputsAmountSum
 		vOut.Asset.ScriptKey = vOut.ScriptKey
 
+		// We also need to clear the split commitment root to avoid
+		// state from previous splits being carried over.
+		vOut.Asset.SplitCommitmentRoot = nil
+
 		// Gather previous witnesses from the input assets.
 		prevWitnesses := make([]asset.Witness, len(inputs))
 		for idx := range inputs {
-			input := inputs[idx]
+			in := inputs[idx]
 
 			// Record the PrevID of the input asset in a Witness for
 			// the new asset. This Witness still needs a valid
 			// signature for the new asset to be valid.
 			prevWitnesses[idx] = asset.Witness{
-				PrevID:          &input.PrevID,
+				PrevID:          &in.PrevID,
 				TxWitness:       nil,
 				SplitCommitment: nil,
 			}
diff --git a/vm/vm.go b/vm/vm.go
index b319ce0ce..16eedcbdf 100644
--- a/vm/vm.go
+++ b/vm/vm.go
@@ -366,7 +366,9 @@ func (vm *Engine) validateStateTransition() error {
 	if treeRoot.NodeSum() !=
 		uint64(virtualTx.TxOut[0].Value) {
 
-		return newErrKind(ErrAmountMismatch)
+		return newErrInner(ErrAmountMismatch, fmt.Errorf("expected "+
+			"output value=%v, got=%v", treeRoot.NodeSum(),
+			virtualTx.TxOut[0].Value))
 	}
 
 	for i, witness := range vm.newAsset.PrevWitnesses {