diff --git a/lightningd/lightningd.c b/lightningd/lightningd.c
index 823e697c0..c90424f44 100644
--- a/lightningd/lightningd.c
+++ b/lightningd/lightningd.c
@@ -178,21 +178,17 @@ static const char *find_my_path(const tal_t *ctx, const char *argv0)
 }
 
 void derive_peer_seed(struct lightningd *ld, struct privkey *peer_seed,
-		      const struct pubkey *peer_id)
+		      const struct pubkey *peer_id, const u64 channel_id)
 {
-	be64 counter = cpu_to_be64(ld->peer_counter);
-	u8 input[PUBKEY_DER_LEN + sizeof(counter)];
+	u8 input[PUBKEY_DER_LEN + sizeof(channel_id)];
 	char *info = "per-peer seed";
-
 	pubkey_to_der(input, peer_id);
-	memcpy(input + PUBKEY_DER_LEN, &counter, sizeof(counter));
+	memcpy(input + PUBKEY_DER_LEN, &channel_id, sizeof(channel_id));
 
 	hkdf_sha256(peer_seed, sizeof(*peer_seed),
 		    input, sizeof(input),
 		    &ld->peer_seed, sizeof(ld->peer_seed),
 		    info, strlen(info));
-	/* FIXME: This must be saved in db. */
-	ld->peer_counter++;
 }
 
 static void shutdown_subdaemons(struct lightningd *ld)
@@ -273,7 +269,7 @@ int main(int argc, char *argv[])
 	list_for_each(&ld->peers, peer, list) {
 		populate_peer(ld, peer);
 		peer->seed = tal(peer, struct privkey);
-		derive_peer_seed(ld, peer->seed, &peer->id);
+		derive_peer_seed(ld, peer->seed, &peer->id, peer->channel->id);
 	}
 
 	/* Create RPC socket (if any) */
diff --git a/lightningd/lightningd.h b/lightningd/lightningd.h
index bc978749b..dc3322f9b 100644
--- a/lightningd/lightningd.h
+++ b/lightningd/lightningd.h
@@ -65,8 +65,23 @@ struct lightningd {
 	const struct chainparams *chainparams;
 };
 
+/**
+ * derive_peer_seed - Generate a unique secret for this peer's channel
+ *
+ * @ld: the lightning daemon to get global secret from
+ * @peer_seed: where to store the generated secret
+ * @peer_id: the id node_id of the remote peer
+ * @chan_id: channel ID
+ *
+ * This method generates a unique secret from the given parameters. It
+ * is important that this secret be unique for each channel, but it
+ * must be reproducible for the same channel in case of
+ * reconnection. We use the DB channel ID to guarantee unique secrets
+ * per channel.
+ */
 void derive_peer_seed(struct lightningd *ld, struct privkey *peer_seed,
-		      const struct pubkey *peer_id);
+		      const struct pubkey *peer_id, const u64 channel_id);
+
 struct peer *find_peer_by_unique_id(struct lightningd *ld, u64 unique_id);
 /* FIXME */
 static inline struct lightningd *
diff --git a/lightningd/peer_control.c b/lightningd/peer_control.c
index f8b8da969..26b53d995 100644
--- a/lightningd/peer_control.c
+++ b/lightningd/peer_control.c
@@ -2042,8 +2042,16 @@ void peer_fundee_open(struct peer *peer, const u8 *from_peer,
 		       &max_to_self_delay, &max_minimum_depth,
 		       &min_effective_htlc_capacity_msat);
 
+	/* Store the channel in the database in order to get a channel
+	 * ID that is unique and which we can base the peer_seed on */
+	peer->channel = peer_channel_new(ld->wallet, peer);
+	if (!wallet_channel_save(peer->ld->wallet, peer->channel)) {
+		fatal("Could not save channel to database: %s",
+		      peer->ld->wallet->db->err);
+	}
 	peer->seed = tal(peer, struct privkey);
-	derive_peer_seed(ld, peer->seed, &peer->id);
+	derive_peer_seed(ld, peer->seed, &peer->id, peer->channel->id);
+
 	msg = towire_opening_init(peer, ld->chainparams->index,
 				  &peer->our_config,
 				  max_to_self_delay,
@@ -2060,7 +2068,6 @@ void peer_fundee_open(struct peer *peer, const u8 *from_peer,
 		peer_fail_permanent_str(peer, "Unacceptably long open_channel");
 		return;
 	}
-	peer->channel = peer_channel_new(ld->wallet, peer);
 	subd_req(peer, peer->owner, take(msg), -1, 2,
 		 opening_fundee_finished, peer);
 }
@@ -2104,7 +2111,16 @@ static bool gossip_peer_released(struct subd *gossip,
 	}
 	fc->peer->owner = opening;
 
+	/* Store the channel in the database in order to get a channel
+	 * ID that is unique and which we can base the peer_seed on */
 	fc->peer->channel = peer_channel_new(ld->wallet, fc->peer);
+	if (!wallet_channel_save(fc->peer->ld->wallet, fc->peer->channel)) {
+		fatal("Could not save channel to database: %s",
+		      fc->peer->ld->wallet->db->err);
+	}
+	fc->peer->seed = tal(fc->peer, struct privkey);
+	derive_peer_seed(ld, fc->peer->seed, &fc->peer->id,
+			 fc->peer->channel->id);
 
 	/* We will fund channel */
 	fc->peer->funder = LOCAL;
@@ -2114,8 +2130,6 @@ static bool gossip_peer_released(struct subd *gossip,
 
 	fc->peer->channel_flags = OUR_CHANNEL_FLAGS;
 
-	fc->peer->seed = tal(fc->peer, struct privkey);
-	derive_peer_seed(ld, fc->peer->seed, &fc->peer->id);
 	msg = towire_opening_init(fc, ld->chainparams->index,
 				  &fc->peer->our_config,
 				  max_to_self_delay,
diff --git a/wallet/wallet.c b/wallet/wallet.c
index 34e148119..8685819b8 100644
--- a/wallet/wallet.c
+++ b/wallet/wallet.c
@@ -550,6 +550,8 @@ static bool wallet_stmt2channel(struct wallet *w, sqlite3_stmt *stmt,
 
 	assert(col == 34);
 
+	chan->peer->channel = chan;
+
 	return ok;
 }