diff --git a/channeldb/channel.go b/channeldb/channel.go
index d179878ffec..9a52b494e4a 100644
--- a/channeldb/channel.go
+++ b/channeldb/channel.go
@@ -185,7 +185,7 @@ type OpenChannel struct {
 	// StateHintObsfucator are the btyes selected by the initiator (derived
 	// from their shachain root) to obsfucate the state-hint encoded within
 	// the commitment transaction.
-	StateHintObsfucator [4]byte
+	StateHintObsfucator [6]byte
 
 	// ChanType denotes which type of channel this is.
 	ChanType ChannelType
diff --git a/channeldb/channel_test.go b/channeldb/channel_test.go
index c56f6197c13..1baf1abb7bd 100644
--- a/channeldb/channel_test.go
+++ b/channeldb/channel_test.go
@@ -132,7 +132,7 @@ func createTestChannelState(cdb *DB) (*OpenChannel, error) {
 		}
 	}
 
-	var obsfucator [4]byte
+	var obsfucator [6]byte
 	copy(obsfucator[:], key[:])
 
 	return &OpenChannel{
diff --git a/lnwallet/channel.go b/lnwallet/channel.go
index f92295a7ee6..dfeb5066344 100644
--- a/lnwallet/channel.go
+++ b/lnwallet/channel.go
@@ -875,7 +875,7 @@ func (lc *LightningChannel) closeObserver(channelCloseNtfn *chainntnfs.SpendEven
 	// Decode the state hint encoded within the commitment transaction to
 	// determine if this is a revoked state or not.
 	obsfucator := lc.channelState.StateHintObsfucator
-	broadcastStateNum := uint64(GetStateNumHint(commitTxBroadcast, obsfucator))
+	broadcastStateNum := GetStateNumHint(commitTxBroadcast, obsfucator)
 
 	currentStateNum := lc.currentHeight
 
@@ -1125,7 +1125,7 @@ func (lc *LightningChannel) fetchCommitmentView(remoteChain bool,
 	// quickly recovering the necessary penalty state in the case of an
 	// uncooperative broadcast.
 	obsfucator := lc.channelState.StateHintObsfucator
-	stateNum := uint32(nextHeight)
+	stateNum := nextHeight
 	if err := SetStateNumHint(commitTx, stateNum, obsfucator); err != nil {
 		return nil, err
 	}
diff --git a/lnwallet/script_utils.go b/lnwallet/script_utils.go
index dc4f853a4a3..a687ee0d0c3 100644
--- a/lnwallet/script_utils.go
+++ b/lnwallet/script_utils.go
@@ -23,18 +23,28 @@ var (
 	SequenceLockTimeSeconds      = uint32(1 << 22)
 	SequenceLockTimeMask         = uint32(0x0000ffff)
 	OP_CHECKSEQUENCEVERIFY  byte = txscript.OP_NOP3
+
+	// TimelockShift is used to make sure the commitment transaction is
+	// spendable by setting the locktime with it so that it is larger than
+	// 500,000,000, thus interpreting it as Unix epoch timestamp and not
+	// a block height. It is also smaller than the current timestamp which
+	// has bit (1 << 30) set, so there is no risk of having the commitment
+	// transaction be rejected. This way we can safely use the lower 24 bits
+	// of the locktime field for part of the obscured commitment transaction
+	// number.
+	TimelockShift = uint32(1 << 29)
 )
 
 const (
 	// StateHintSize is the total number of bytes used between the sequence
 	// number and locktime of the commitment transaction use to encode a hint
 	// to the state number of a particular commitment transaction.
-	StateHintSize = 4
+	StateHintSize = 6
 
 	// maxStateHint is the maximum state number we're able to encode using
 	// StateHintSize bytes amongst the sequence number and locktime fields
 	// of the commitment transaction.
-	maxStateHint = (1 << 31) - 1
+	maxStateHint = (1 << 48) - 1
 )
 
 // witnessScriptHash generates a pay-to-witness-script-hash public key script
@@ -770,20 +780,21 @@ func deriveElkremRoot(elkremDerivationRoot *btcec.PrivateKey,
 }
 
 // SetStateNumHint encodes the current state number within the passed
-// commitment transaction by re-purposing the sequence fields in the input of
-// the commitment transaction to encode the obfuscated state number. The state
-// number is encoded using 31-bits of the sequence number, with the top bit set
-// in order to disable BIP0068 (sequence locks) semantics. Finally before
-// encoding, the obfuscater is XOR'd against the state number in order to hide
-// the exact state number from the PoV of outside parties.
+// commitment transaction by re-purposing the locktime and sequence fields
+// in the commitment transaction to encode the obfuscated state number.
+// The state number is encoded using 48 bits. The lower 24 bits of the
+// locktime are the lower 24 bits of the obfuscated state number and the
+// lower 24 bits of the sequence field are the higher 24 bits. Finally
+// before encoding, the obfuscater is XOR'd against the state number in
+// order to hide the exact state number from the PoV of outside parties.
 // TODO(roasbeef): unexport function after bobNode is gone
-func SetStateNumHint(commitTx *wire.MsgTx, stateNum uint32,
+func SetStateNumHint(commitTx *wire.MsgTx, stateNum uint64,
 	obsfucator [StateHintSize]byte) error {
 
 	// With the current schema we are only able able to encode state num
-	// hints up to 2^31. Therefore if the passed height is greater than our
+	// hints up to 2^48. Therefore if the passed height is greater than our
 	// state hint ceiling, then exit early.
-	if stateNum >= maxStateHint {
+	if stateNum > maxStateHint {
 		return fmt.Errorf("unable to encode state, %v is greater "+
 			"state num that max of %v", stateNum, maxStateHint)
 	}
@@ -793,16 +804,20 @@ func SetStateNumHint(commitTx *wire.MsgTx, stateNum uint32,
 			"instead has %v", len(commitTx.TxIn))
 	}
 
-	// Convert the obfuscater into a uint32, then XOR that against the
+	// Convert the obfuscator into a uint64, then XOR that against the
 	// targeted height in order to obfuscate the state number of the
 	// commitment transaction in the case that either commitment
 	// transaction is broadcast directly on chain.
-	xorInt := binary.BigEndian.Uint32(obsfucator[:]) & (^wire.SequenceLockTimeDisabled)
+	var obfs [8]byte
+	copy(obfs[2:], obsfucator[:])
+	xorInt := binary.BigEndian.Uint64(obfs[:])
+
 	stateNum = stateNum ^ xorInt
 
 	// Set the height bit of the sequence number in order to disable any
 	// sequence locks semantics.
-	commitTx.TxIn[0].Sequence = stateNum | wire.SequenceLockTimeDisabled
+	commitTx.TxIn[0].Sequence = uint32(stateNum>>24) | wire.SequenceLockTimeDisabled
+	commitTx.LockTime = uint32(stateNum&0xFFFFFF) | TimelockShift
 
 	return nil
 }
@@ -813,14 +828,17 @@ func SetStateNumHint(commitTx *wire.MsgTx, stateNum uint32,
 //
 // See setStateNumHint for further details w.r.t exactly how the state-hints
 // are encoded.
-func GetStateNumHint(commitTx *wire.MsgTx, obsfucator [StateHintSize]byte) uint32 {
-	// Convert the obfuscater into a uint32, this will be used to
+func GetStateNumHint(commitTx *wire.MsgTx, obsfucator [StateHintSize]byte) uint64 {
+	// Convert the obfuscater into a uint64, this will be used to
 	// de-obfuscate the final recovered state number.
-	xorInt := binary.BigEndian.Uint32(obsfucator[:]) & (^wire.SequenceLockTimeDisabled)
-
-	// Retrieve the sole state hint from the sequence number of the
-	// transaction. In the process un-set the top bit.
-	stateNumXor := commitTx.TxIn[0].Sequence & (^wire.SequenceLockTimeDisabled)
+	var obfs [8]byte
+	copy(obfs[2:], obsfucator[:])
+	xorInt := binary.BigEndian.Uint64(obfs[:])
+
+	// Retrieve the state hint from the sequence number and locktime
+	// of the transaction.
+	stateNumXor := uint64(commitTx.TxIn[0].Sequence&0xFFFFFF) << 24
+	stateNumXor |= uint64(commitTx.LockTime & 0xFFFFFF)
 
 	// Finally, to obtain the final state number, we XOR by the obfuscater
 	// value to de-obfuscate the state number.
diff --git a/lnwallet/script_utils_test.go b/lnwallet/script_utils_test.go
index fb0ec41fda7..fabdcfc0dd7 100644
--- a/lnwallet/script_utils_test.go
+++ b/lnwallet/script_utils_test.go
@@ -4,6 +4,7 @@ import (
 	"bytes"
 	"fmt"
 	"testing"
+	"time"
 
 	"github.com/btcsuite/fastsha256"
 	"github.com/roasbeef/btcd/btcec"
@@ -563,25 +564,92 @@ func TestHTLCReceiverSpendValidation(t *testing.T) {
 	}
 }
 
+var stateHintTests = []struct {
+	name       string
+	from       uint64
+	to         uint64
+	inputs     int
+	shouldFail bool
+}{
+	{
+		name:       "states 0 to 1000",
+		from:       0,
+		to:         1000,
+		inputs:     1,
+		shouldFail: false,
+	},
+	{
+		name:       "states 'maxStateHint-1000' to 'maxStateHint'",
+		from:       maxStateHint - 1000,
+		to:         maxStateHint,
+		inputs:     1,
+		shouldFail: false,
+	},
+	{
+		name:       "state 'maxStateHint+1'",
+		from:       maxStateHint + 1,
+		to:         maxStateHint + 10,
+		inputs:     1,
+		shouldFail: true,
+	},
+	{
+		name:       "commit transaction with two inputs",
+		inputs:     2,
+		shouldFail: true,
+	},
+}
+
 func TestCommitTxStateHint(t *testing.T) {
-	commitTx := wire.NewMsgTx(2)
-	commitTx.AddTxIn(&wire.TxIn{})
 
 	var obsfucator [StateHintSize]byte
 	copy(obsfucator[:], testHdSeed[:StateHintSize])
+	timeYesterday := uint32(time.Now().Unix() - 24*60*60)
 
-	for i := 0; i < 10000; i++ {
-		stateNum := uint32(i)
+	for _, test := range stateHintTests {
+		commitTx := wire.NewMsgTx(2)
 
-		err := SetStateNumHint(commitTx, stateNum, obsfucator)
-		if err != nil {
-			t.Fatalf("unable to set state num %v: %v", i, err)
+		// Add supplied number of inputs to the commitment transaction.
+		for i := 0; i < test.inputs; i++ {
+			commitTx.AddTxIn(&wire.TxIn{})
 		}
 
-		extractedStateNum := GetStateNumHint(commitTx, obsfucator)
-		if extractedStateNum != stateNum {
-			t.Fatalf("state number mismatched, expected %v, got %v",
-				stateNum, extractedStateNum)
+		for i := test.from; i <= test.to; i++ {
+			stateNum := uint64(i)
+
+			err := SetStateNumHint(commitTx, stateNum, obsfucator)
+			if err != nil && !test.shouldFail {
+				t.Fatalf("unable to set state num %v: %v", i, err)
+			} else if err == nil && test.shouldFail {
+				t.Fatalf("Failed(%v): test should fail but did not", test.name)
+			}
+
+			locktime := commitTx.LockTime
+			sequence := commitTx.TxIn[0].Sequence
+
+			// Locktime should not be less than 500,000,000 and not larger
+			// than the time 24 hours ago. One day should provide a good
+			// enough buffer for the tests.
+			if locktime < 5e8 || locktime > timeYesterday {
+				if !test.shouldFail {
+					t.Fatalf("The value of locktime (%v) may cause the commitment "+
+						"transaction to be unspendable", locktime)
+				}
+			}
+
+			if sequence&wire.SequenceLockTimeDisabled == 0 {
+				if !test.shouldFail {
+					t.Fatalf("Sequence locktime is NOT disabled when it should be")
+				}
+			}
+
+			extractedStateNum := GetStateNumHint(commitTx, obsfucator)
+			if extractedStateNum != stateNum && !test.shouldFail {
+				t.Fatalf("state number mismatched, expected %v, got %v",
+					stateNum, extractedStateNum)
+			} else if extractedStateNum == stateNum && test.shouldFail {
+				t.Fatalf("Failed(%v): test should fail but did not", test.name)
+			}
 		}
+		t.Logf("Passed: %v", test.name)
 	}
 }
diff --git a/lnwallet/wallet.go b/lnwallet/wallet.go
index c4123c9a4e2..81a2d8c327d 100644
--- a/lnwallet/wallet.go
+++ b/lnwallet/wallet.go
@@ -1397,7 +1397,7 @@ func deriveStateHintObsfucator(elkremRoot *elkrem.ElkremSender) ([StateHintSize]
 	return obsfucator, nil
 }
 
-// initStateHints properly sets the obsfucated state ints ob both commitment
+// initStateHints properly sets the obsfucated state hints on both commitment
 // transactions using the passed obsfucator.
 func initStateHints(commit1, commit2 *wire.MsgTx,
 	obsfucator [StateHintSize]byte) error {
diff --git a/lnwire/lnwire.go b/lnwire/lnwire.go
index 752355e8861..3ae9e389098 100644
--- a/lnwire/lnwire.go
+++ b/lnwire/lnwire.go
@@ -171,6 +171,10 @@ func writeElement(w io.Writer, element interface{}) error {
 			return err
 		}
 
+		if _, err := w.Write(e[:]); err != nil {
+			return err
+		}
+	case [6]byte:
 		if _, err := w.Write(e[:]); err != nil {
 			return err
 		}
@@ -467,6 +471,10 @@ func readElement(r io.Reader, element interface{}) error {
 		if _, err := io.ReadFull(r, *e); err != nil {
 			return err
 		}
+	case *[6]byte:
+		if _, err := io.ReadFull(r, e[:]); err != nil {
+			return err
+		}
 	case []byte:
 		if _, err := io.ReadFull(r, e); err != nil {
 			return err
diff --git a/lnwire/single_funding_complete.go b/lnwire/single_funding_complete.go
index 323a855737d..5e1eb5d6df9 100644
--- a/lnwire/single_funding_complete.go
+++ b/lnwire/single_funding_complete.go
@@ -41,14 +41,14 @@ type SingleFundingComplete struct {
 	// the commitment transaction's only input. The initiator generates
 	// this value by hashing the 0th' state derived from the revocation PRF
 	// an additional time.
-	StateHintObsfucator [4]byte
+	StateHintObsfucator [6]byte
 }
 
 // NewSingleFundingComplete creates, and returns a new empty
 // SingleFundingResponse.
 func NewSingleFundingComplete(chanID uint64, fundingPoint wire.OutPoint,
 	commitSig *btcec.Signature, revokeKey *btcec.PublicKey,
-	obsfucator [4]byte) *SingleFundingComplete {
+	obsfucator [6]byte) *SingleFundingComplete {
 
 	return &SingleFundingComplete{
 		ChannelID:           chanID,
diff --git a/lnwire/single_funding_complete_test.go b/lnwire/single_funding_complete_test.go
index a340bc6ca04..43dfc9996ec 100644
--- a/lnwire/single_funding_complete_test.go
+++ b/lnwire/single_funding_complete_test.go
@@ -7,8 +7,8 @@ import (
 )
 
 func TestSingleFundingCompleteWire(t *testing.T) {
-	var obsfucator [4]byte
-	copy(obsfucator[:], bytes.Repeat([]byte("k"), 4))
+	var obsfucator [6]byte
+	copy(obsfucator[:], bytes.Repeat([]byte("k"), 6))
 
 	// First create a new SFC message.
 	sfc := NewSingleFundingComplete(22, *outpoint1, commitSig1, pubKey,