LND Channel Rebalancing Strategies -- Optimize Routing Revenue

Channel rebalancing keeps liquidity flowing on both sides so you can route payments and earn fees. Here are the main strategies.

1. Circular Rebalance with lncli

# Send a circular payment through a specific route
lncli payinvoice --amt 100000 \
  --last_hop <peer_pubkey> \
  <invoice_from_your_own_node>

2. Use bos (Balance of Satoshis)

# Rebalance from channel X to channel Y
bos rebalance \
  --out <outbound_peer_pubkey> \
  --in <inbound_peer_pubkey> \
  --amount 500000

# With max fee limit (50 ppm)
bos rebalance --out <out> --in <in> --amount 500000 --max-fee-rate 50

3. Loop Out (Off-chain to On-chain)

# Move liquidity off a channel back on-chain
loop out --amt 1000000 --channel <channel_id>

Loop Out frees up local balance (inbound) by sending funds to your on-chain wallet.

4. Submarine Swaps (Third-party)

Services like Boltz, FixedFloat, or SideShift can swap Lightning sats for on-chain BTC, effectively rebalancing without circular payments.

When to Rebalance

- Local balance near 0% — you cannot send, need inbound from peers

- Remote balance near 0% — peers cannot pay through you, losing routing fees

- After a large send/receive that skewed the channel

Cost vs Benefit

Rebalancing costs fees. Only rebalance if the expected routing fees earned exceed the rebalancing cost. Aim for max-fee-rate well below your own routing fee rate.