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rebalance-lnd

Using this script you can easily rebalance individual channels of your lnd node by sending funds out one channel, through the lightning network, back to yourself.

This script helps you move funds between your channels so that you can increase the outbound liquidity in one channel, while decreasing the outbound liquidity in another channel. This way you can, for example, make sure that all of your channels have enough outbound liquidity to send/route transactions.

Because you are both the sender and the receiver of the corresponding transactions, you only have to pay for routing fees. Aside from paid fees, your total liquidity does not change.

Installation

lnd

This script needs an active lnd (tested with v0.13.0, https://github.com/lightningnetwork/lnd) instance running. If you compile lnd yourself, you need to include the routerrpc build tag:

Example: make tags="autopilotrpc signrpc walletrpc chainrpc invoicesrpc routerrpc"

You need to have admin rights to control this node. By default, this script connects to localhost:10009, using the macaroon file in ~/.lnd/data/chain/bitcoin/mainnet/admin.macaroon. If this does not help, it also tries to find the file in ~/umbrel/lnd/data/chain/bitcoin/mainnet/admin.macaroon. If you need to change this, please have a look at the optional arguments --grpc and --lnddir.

rebalance-lnd itself

You need to download the files that are part of this project, for example using git:

cd /some/where/
git clone https://github.com/C-Otto/rebalance-lnd.git
cd rebalance-lnd/

Alternatively, you may also download the files in a ZIP file offered by GitHub: https://github.com/C-Otto/rebalance-lnd/archive/refs/heads/main.zip

Python Dependencies

You need to install Python 3. You also need to install the gRPC dependencies which can be done by running:

$ pip install -r requirements.txt

If this fails, make sure you are running Python 3. You might want to try pip3 instead of pip.

To test if your installation works, you can run rebalance.py without any arguments. Depending on your system, you can do this in one of the following ways:

  • python3 rebalance.py
  • ./rebalance.py
  • python rebalance.py

Updating

If you already have a version of rebalance-lnd checked out via git, you can just use git pull to update to the latest version. You may also delete everything and start over with a fresh installation, as the script does not store any data that needs to be kept.

Do not forget to update the Python dependencies as described above.

Usage

List of channels

Run rebalance.py -l (or rebalance.py -l -i) to see a list of channels which can be rebalanced. This list only contains channels where you should increase the outbound liquidity (you can specify --show-all to see all channels).

You can also see the list of channels where the inbound liquidity should be increased by running rebalance.py -l -o.

As an example the following indicates a channel with around 17.7% of the funds on the local side:

Channel ID:       11111111
Alias:            The Best Node Ever
Pubkey:           012345[...]abcdef
Channel Point:    abc0123[...]abc:0
Local ratio:      0.176
Fee rates:        123ppm (own), 456ppm (peer)
Capacity:         5,000,000
Remote available: 4,110,320
Local available:    883,364
Rebalance amount:   116,636
[█████░░░░░░░░░░░░░░░░░░░░░░░]

By sending 116,636 satoshis to yourself using this channel, an outbound liquidity of 1,000,000 satoshis can be achieved. This number is shown as "Rebalance amount" (where negative amounts indicate that you need to increase your inbound liquidity).

The last line shows a graphical representation of the channel. The total width is determined by the channel's capacity, where your largest channel (maximum capacity) occupies the full width of your terminal. The bar () indicates the funds on the local side of the channel, i.e. your outbound liquidity.

Rebalancing a channel

Basic Scenario

In this scenario you already know what you want to do, possibly because you identified a channel with high outbound liquidity.

Let us assume you want to move some funds from this channel to another channel with low outbound liquidity:

  • move 100,000 satoshis around
  • take those funds (plus fees) out of channel 11111111
  • move those funds back into channel 22222222

You can achieve this by running:

rebalance.py --amount 100000 --from 11111111 --to 22222222

The script now tries to find a route through the lightning network that starts with channel 11111111 and ends with channel 22222222. If successful, you take 100,000 satoshis (plus fees) out of channel 11111111 (which means that you decrease your outbound liquidity and increase your inbound liquidity). In return, you get 100,000 satoshis back through channel 22222222 (which means that you increase your outbound liquidity and decrease your inbound liquidity).

Automatically determined amount

If you do not specify the amount, i.e. you invoke rebalance.py --from 11111111 --to 22222222, the script automatically determines the amount. For this two main constraints are taken into consideration:

After the rebalance transaction is finished,

  • the destination channel (22222222) should have (up to) 1,000,000 satoshis outbound liquidity
  • the source channel (11111111) should have (at least) 1,000,000 satoshis outbound liquidity

If the source channel has enough surplus outbound liquidity, the script constructs a transaction that ensures 1,000,000 satoshis of outbound liquidity in the destination channel. However, if the source channel does not have enough outbound liquidity, the amount is determined so that (after the rebalance transaction is performed) the source channel has 1,000,000 satoshis of outbound liquidity and the destination channel has more outbound liquidity than before (but not necessarily 1,000,000 satoshis).

Note that for smaller channels these criteria cannot be met. If that is the case, a ratio of 50% is targeted instead: the destination channel receives up to 50% outbound liquidity, and for the sending channel at least 50% outbound liquidity are maintained.

Limiting the automatically determined amount

If you use both -a to specify an amount and -A (shorthand for --adjust-amount-to-limits), the computed amount is adjusted to the given amount. If, for example, you send funds to a channel that lacks 500,000sat to reach the --min-local value, the computed amount is 500,000sat. If you invoke the script with -A -a 90000 this amount is reduced to 90,000sat. If the adjusted amount is below the --min-amount setting, the script stops.

This way, using both options (-a xxx -A) you can start a rebalance attempt with the given amount, which will only be attempted if it is necessary. Thus, you may want to run ./rebalance.py -t xxx -A -a 50000 in a loop or cron job to automatically send up to 50,000sat to channel xxx until it has reached the --min-local limit. If the channel already satisfies the --min-local limit, the script exits and does not attempt to send any funds.

Only specifying one channel

Instead of specifying both --from and --to, you can also just pick one of those options. The script then considers all of your other channels as possible "partners", still taking into account the constraints described above.

As an example, if you run rebalance.py --amount 100000 --to 22222222, the script tries to find source channels that, after sending 100,000 satoshis (plus fees), still have at least 1,000,000 satoshis of outbound liquidity. In other words, the script does not send funds from already "empty" channels.

Likewise, when only specifying --from, the script only considers target channels which still have at least 1,000,000 satoshis of outbound liquidity after receiving the payment.

If you also let the script determine the amount, e.g. you run rebalance.py --to 22222222, the script first computes the amount that is necessary to reach 1,000,000 satoshis of outbound liquidity in channel 22222222, and then tries to find source channels for the computed amount.

Safety Checks and Limitations

Note that, by default, nothing is done if the amount (either given or computed) is smaller than 10,000 satoshis. You can change this number using --min-amount.

The maximum amount you can send in one transaction currently is limited (by the protocol) to 4,294,967 satoshis.

Furthermore, a rebalance transaction is only sent if it is economically viable as described below. This way, by default, you only send rebalance transactions that improve your node's situation, for example by providing outbound liquidity to channels where you charge a lot, and taking those funds out of channels where you charge less.

To protect you from making mistakes, in the fee computation (described below) the fee rate of the destination channel is capped at 2,000ppm (which corresponds to a 0.2% fee), even if the channel is configured with a higher fee rate.

Fees

In order for the network to route your rebalance transaction, you have to pay fees. In addition to the fees charged by the nodes routing your transaction, two other values are taken into account:

  1. The fee you would earn if, instead of sending the funds out of the source channel as part of the rebalance transaction, your node is paid to forward the amount
  2. The fee you would earn if, after the rebalance transaction is done, your node forwards the amount through the destination channel

The first bullet point describes opportunity/implicit costs. If you take lots of funds out of the source channel, you cannot use those funds to earn routing fees via that channel. As such, taking funds out of a channel where you configured a high fee rate can be considered costly.

The second bullet points describes future earnings. If you send funds to the destination channel and increase your outbound liquidity in that channel, you might earn fees for routing those funds. As such, increasing the outbound liquidity of the destination is a good idea, assuming the fee rate configured for the destination channel is higher than the fee rate you configured for the source channel. However, keep in mind that you will only earn those fees if your node actually forwards the funds via the channel!

The rebalance transaction is not performed if the transaction fees plus the implicit costs (1) are higher than the possible future earnings (2).

If you really want to, you may disable these safety checks with --reckless.

Example

You have lots of funds in channel 11111111 and nothing in channel 22222222. You would like to send funds through channel 11111111 (source channel) through the lightning network, and finally back into channel 22222222. This incurs a transaction fee you would have to pay for the transaction.

Furthermore, if in the future there is demand for your node to route funds through channel 11111111, you cannot do that as much (because you decreased your outbound liquidity in the channel). The associated fees are the implicit cost (1).

Finally, you send funds into channel 22222222 in the hope that later on someone requests your node to forward funds from your own node through channel 22222222 towards the peer at the other end, so that you can earn fees for this. These fees are the possible future income (2).

Fee Factor

The value set with --fee-factor is used to scale the future income used in the computation outlined above. As such, you can fool the script into believing that the fee rate configured for the destination channel is higher (fee factor > 1) or lower (fee factor < 1) than it actually is.

As such, if you set --fee-factor to a value higher than 1, more routes are considered. As an example, with --fee-factor 1.5 you can include routes that cost up to 150% of the future income.

With values smaller than 1 only cheaper routes are considered.

Fee Limit

Unrelated to --fee-factor (which is the default, with a value of 1), you can also specify an absolute fee limit using --fee-limit. If you decide to do so, only routes that cost up to the given number (in satoshis) are considered.

Note that the script rejects routes/channels that are deemed uneconomical based on the configured fee rates (i.e. with --fee-factor set to 1) (as explained above).

Fee Rate (ppm) Limit

You can use --fee-ppm-limit as another alternative to specify a fee limit. In this case the amount sent as part of the rebalance is considered, so that the fee is at most

amount * fee-ppm-limit / 1_000_000

Note that the script rejects routes/channels that are deemed uneconomical based on the configured fee rates (i.e. with --fee-factor set to 1) (as explained above).

Warning

To determine the future income, the fee rate you configured for the destination channel is used in the computation. As such, if you set an unrealistic fee rate that will not lead to forward transactions, you would allow more expensive rebalance transactions without earning anything in return. Please make sure to set realistic fee rates, which at best are already known to attract forwardings.

Command line arguments

usage: rebalance.py [-h] [--lnddir LNDDIR] [--network NETWORK] [--grpc GRPC]
                    [-l] [--show-all | --show-only CHANNEL | -c] [-o | -i]
                    [-f CHANNEL] [-t CHANNEL] [-A] [-a AMOUNT | -p PERCENTAGE]
                    [--min-amount MIN_AMOUNT] [--min-local MIN_LOCAL]
                    [--min-remote MIN_REMOTE] [-e EXCLUDE] [--reckless]
                    [--fee-factor FEE_FACTOR]
                    [--fee-limit FEE_LIMIT | --fee-ppm-limit FEE_PPM_LIMIT]

optional arguments:
  -h, --help            show this help message and exit
  --lnddir LNDDIR       (default ~/.lnd) lnd directory
  --network NETWORK     (default mainnet) lnd network (mainnet, testnet,
                        simnet, ...)
  --grpc GRPC           (default localhost:10009) lnd gRPC endpoint

list candidates:
  Show the unbalanced channels.

  -l, --list-candidates
                        list candidate channels for rebalance
  --show-all            also show channels with zero rebalance amount
  --show-only CHANNEL   only show information about the given channel
  -c, --compact         Shows a compact list of all channels, one per line
                        including ID, inbound/outbound liquidity, and alias
  -o, --outgoing        lists channels with less than 1,000,000 (--min-remote)
                        satoshis inbound liquidity
  -i, --incoming        (default) lists channels with less than 1,000,000
                        (--min-local) satoshis outbound liquidity

rebalance:
  Rebalance a channel. You need to specify at least the 'from' channel (-f)
  or the 'to' channel (-t).

  -f CHANNEL, --from CHANNEL
                        Channel ID of the outgoing channel (funds will be
                        taken from this channel). You may also specify the ID
                        using the colon notation (12345:12:1), or the x
                        notation (12345x12x1). You may also use -1 to choose a
                        random candidate.
  -t CHANNEL, --to CHANNEL
                        Channel ID of the incoming channel (funds will be sent
                        to this channel). You may also specify the ID using
                        the colon notation (12345:12:1), or the x notation
                        (12345x12x1). You may also use -1 to choose a random
                        candidate.
  -A, --adjust-amount-to-limits
                        If set, adjust the amount to the limits (--min-local
                        and --min-remote). The script will exit if the
                        adjusted amount is below the --min-amount threshold.
                        As such, this switch can be used if you do NOT want to
                        rebalance if the channel is within the limits.
  -a AMOUNT, --amount AMOUNT
                        Amount of the rebalance, in satoshis. If not
                        specified, the amount computed for a perfect rebalance
                        will be used (up to the maximum of 4,294,967 satoshis)
  -p PERCENTAGE, --percentage PERCENTAGE
                        Set the amount to a percentage of the computed amount.
                        As an example, if this is set to 50, half of the
                        computed amount will be used. See --amount.
  --min-amount MIN_AMOUNT
                        (Default: 10,000) If the given or computed rebalance
                        amount is below this limit, nothing is done.
  --min-local MIN_LOCAL
                        (Default: 1,000,000) Ensure that the channels have at
                        least this amount as outbound liquidity.
  --min-remote MIN_REMOTE
                        (Default: 1,000,000) Ensure that the channels have at
                        least this amount as inbound liquidity.
  -e EXCLUDE, --exclude EXCLUDE
                        Exclude the given channel. Can be used multiple times.
  --reckless            Allow rebalance transactions that are not economically
                        viable. You might also want to set --min-local 0 and
                        --min-remote 0. If set, you also need to set --amount
                        and either --fee-limit or --fee-ppm-limit, and you
                        must not enable --adjust-amount-to-limits (-A).
  --fee-factor FEE_FACTOR
                        (default: 1.0) Compare the costs against the expected
                        income, scaled by this factor. As an example, with
                        --fee-factor 1.5, routes that cost at most 150% of the
                        expected earnings are tried. Use values smaller than
                        1.0 to restrict routes to only consider those earning
                        more/costing less. This factor is ignored with
                        --reckless.
  --fee-limit FEE_LIMIT
                        If set, only consider rebalance transactions that cost
                        up to the given number of satoshis.
  --fee-ppm-limit FEE_PPM_LIMIT
                        If set, only consider rebalance transactions that cost
                        up to the given number of satoshis per 1M satoshis
                        sent.

Contributing

Contributions are highly welcome! Feel free to submit issues and pull requests on https://github.com/C-Otto/rebalance-lnd/

You can also send donations via keysend. For example, to send 500 satoshis to C-Otto with a message "Thank you for rebalance-lnd":

lncli sendpayment --amt=500 --data 7629168=5468616e6b20796f7520666f7220726562616c616e63652d6c6e64 --keysend --dest=027ce055380348d7812d2ae7745701c9f93e70c1adeb2657f053f91df4f2843c71

You can also specify an arbitrary message:

lncli sendpayment --amt=500 --data 7629168=$(echo -n "your message here" | xxd -pu -c 10000) --keysend --dest=027ce055380348d7812d2ae7745701c9f93e70c1adeb2657f053f91df4f2843c71