diff --git a/lnwallet/script_utils.go b/lnwallet/script_utils.go
index 14266412..a7c3c4c5 100644
--- a/lnwallet/script_utils.go
+++ b/lnwallet/script_utils.go
@@ -7,7 +7,6 @@ import (
 	"fmt"
 	"math/big"
 
-	"golang.org/x/crypto/hkdf"
 	"golang.org/x/crypto/ripemd160"
 
 	"github.com/roasbeef/btcd/btcec"
@@ -1236,33 +1235,6 @@ func DeriveRevocationPrivKey(revokeBasePriv *btcec.PrivateKey,
 	return priv
 }
 
-// DeriveRevocationRoot derives an root unique to a channel given the
-// derivation root, and the blockhash that the funding process began at and the
-// remote node's identity public key. The seed is derived using the HKDF[1][2]
-// instantiated with sha-256. With this schema, once we know the block hash of
-// the funding transaction, and who we funded the channel with, we can
-// reconstruct all of our revocation state.
-//
-// [1]: https://eprint.iacr.org/2010/264.pdf
-// [2]: https://tools.ietf.org/html/rfc5869
-func DeriveRevocationRoot(derivationRoot *btcec.PrivateKey,
-	blockSalt chainhash.Hash, nodePubKey *btcec.PublicKey) chainhash.Hash {
-
-	secret := derivationRoot.Serialize()
-	salt := blockSalt[:]
-	info := nodePubKey.SerializeCompressed()
-
-	seedReader := hkdf.New(sha256.New, secret, salt, info)
-
-	// It's safe to ignore the error her as we know for sure that we won't
-	// be draining the HKDF past its available entropy horizon.
-	// TODO(roasbeef): revisit...
-	var root chainhash.Hash
-	seedReader.Read(root[:])
-
-	return root
-}
-
 // SetStateNumHint encodes the current state number within the passed
 // commitment transaction by re-purposing the locktime and sequence fields in
 // the commitment transaction to encode the obfuscated state number.  The state
diff --git a/lnwallet/wallet.go b/lnwallet/wallet.go
index 563c6a59..536b62ea 100644
--- a/lnwallet/wallet.go
+++ b/lnwallet/wallet.go
@@ -541,30 +541,31 @@ func (l *LightningWallet) handleFundingReserveRequest(req *initFundingReserveMsg
 	}
 
 	// With the above keys created, we'll also need to initialization our
-	// initial revocation tree state. In order to do so in a deterministic
-	// manner (for recovery purposes), we'll use the current block hash
-	// along with the identity public key of the node we're creating the
-	// channel with. In the event of a recovery, given these two items and
-	// the initialize wallet HD seed, we can derive all of our revocation
-	// secrets.
-	masterElkremRoot, err := l.deriveMasterRevocationRoot()
+	// initial revocation tree state.
+	nextRevocationKeyDesc, err := l.DeriveNextKey(
+		keychain.KeyFamilyRevocationRoot,
+	)
 	if err != nil {
 		req.err <- err
 		req.resp <- nil
 		return
 	}
-	bestHash, _, err := l.Cfg.ChainIO.GetBestBlock()
+	revocationRoot, err := l.DerivePrivKey(nextRevocationKeyDesc)
 	if err != nil {
 		req.err <- err
 		req.resp <- nil
 		return
 	}
-	revocationRoot := DeriveRevocationRoot(masterElkremRoot, *bestHash,
-		req.nodeID)
 
 	// Once we have the root, we can then generate our shachain producer
 	// and from that generate the per-commitment point.
-	producer := shachain.NewRevocationProducer(revocationRoot)
+	revRoot, err := chainhash.NewHash(revocationRoot.Serialize())
+	if err != nil {
+		req.err <- err
+		req.resp <- nil
+		return
+	}
+	producer := shachain.NewRevocationProducer(*revRoot)
 	firstPreimage, err := producer.AtIndex(0)
 	if err != nil {
 		req.err <- err
@@ -1329,18 +1330,6 @@ func (l *LightningWallet) selectCoinsAndChange(feeRate SatPerVByte,
 	return nil
 }
 
-// deriveMasterRevocationRoot derives the private key which serves as the master
-// producer root. This master secret is used as the secret input to a HKDF to
-// generate revocation secrets based on random, but public data.
-func (l *LightningWallet) deriveMasterRevocationRoot() (*btcec.PrivateKey, error) {
-	masterElkremRoot, err := l.rootKey.Child(revocationRootIndex)
-	if err != nil {
-		return nil, err
-	}
-
-	return masterElkremRoot.ECPrivKey()
-}
-
 // DeriveStateHintObfuscator derives the bytes to be used for obfuscating the
 // state hints from the root to be used for a new channel. The obfuscator is
 // generated via the following computation:
@@ -1417,8 +1406,6 @@ func coinSelect(feeRate SatPerVByte, amt btcutil.Amount,
 				weightEstimate.AddP2WKHInput()
 			case NestedWitnessPubKey:
 				weightEstimate.AddNestedP2WKHInput()
-			case PubKeyHash:
-				weightEstimate.AddP2PKHInput()
 			default:
 				return nil, 0, fmt.Errorf("Unsupported address type: %v",
 					utxo.AddressType)
@@ -1429,7 +1416,9 @@ func coinSelect(feeRate SatPerVByte, amt btcutil.Amount,
 		weightEstimate.AddP2WSHOutput()
 
 		// Assume that change output is a P2WKH output.
-		// TODO: Handle wallets that generate non-witness change addresses.
+		//
+		// TODO: Handle wallets that generate non-witness change
+		// addresses.
 		weightEstimate.AddP2WKHOutput()
 
 		// The difference between the selected amount and the amount