LN+ asked over 2 years ago
How do I rebalance my channels?
I keep hearing that rebalancing my Bitcoin Lightning Network channels is important. Should I do it and how?
1 Comment
LN+ Admin wrote over 2 years ago
First of all, you don't have to necessarily rebalance your channels. If you're not looking to earn fees on routing, and your node works for sending and receiving SATs you don't have to bother with rebalancing.
What is rebalancing?
Before explaining rebalancing, let me explain what happens without rebalancing.
When you open a channel to another node all the liquidity are on your side. This means you can send SATs, but not receive any on that specific channel.
And there is nothing on their side. When somebody opens a channel to you, all the funds are on their side, and nothing on your side. This means you can only receive SATs on this channel but not send.
In both cases the channels are considered unbalanced.
A balanced channel means there is inbound and outbound capacity on that specific channel. For example, if you have a 2M SAT channel that is balanced you may have 1.2M on your side and 0.8M on the other side. This way you can both receive and send a certain amount of SATs on that specific channel.
When you open a channel to another node all the liquidity are on your side. This means you can send SATs, but not receive any on that specific channel.
And there is nothing on their side. When somebody opens a channel to you, all the funds are on their side, and nothing on your side. This means you can only receive SATs on this channel but not send.
In both cases the channels are considered unbalanced.
A balanced channel means there is inbound and outbound capacity on that specific channel. For example, if you have a 2M SAT channel that is balanced you may have 1.2M on your side and 0.8M on the other side. This way you can both receive and send a certain amount of SATs on that specific channel.
How to achieve a balanced channel?
You can do it in many different ways. Here are your options in increasing level of difficulty:
- You can spend some of the SATs from your channel on anything or send it to another LN wallet of yours.
- You can send some of the SATs from your channel to an exchange that will convert them from LN SATs to on-chain BTC. Then, send the on-chain BTC back to your node, so you can open more channels potentially. Be aware that all exchanges have fees.
- You can circular rebalance your own channels. This is the most popular method, but it costs some SATs to do it.
- If you participated in a Swap here on LN+ elsewhere, you can run a rebalancing script that will rebalance every participant's channels at once. (We will provide such a script in the near future.)
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