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If you route a payment on a self-rebalanced channel, how are you not losing money without spending it?

I can't make any sense of your drawing, it looks like it starts with you having only outbound liquidity and no inbound.

That's not a re-balancing issue, that's just having initiated two channels. You can't circularly route across your own channels if you have no inbound liquidity at all.

If you wanted each channel to have both inbound and outbound liquidity from that state, you'd either lease a 3rd inbound channel and re-balance the other two with that, or, submarine swap out to chain from either of those channels to free up some inbound.

If you spent down one of the channels organically and the outbound was drained from it, and the other was still unused and had no inbound, then you could circular route to make them even.

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173 sats \ 0 replies \ @DarthCoin 7h

Is not really necessary to rebalance all the time.
Rebalance is good when you have depleted channels and do not move anymore.
If you have a good routing fees policy, channels could balance itself.
You also will need to look into the so called "valves liquidity" procedure, where you adjust the min/max HTLCs per channel.

When you do a rebalancing, you will have to adjust also the fees to cover the expenses. For that you will need to look into that channel history and analyze its traffic. Is a really hard job.

But again to mention: this rebalancing procedure is used ONLY for PUBLIC routing nodes, not for private ones.

Here is a quite old video about how to manage (at least) your channels

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100 sats \ 0 replies \ @SwapMarket 6h

Circular rebalancing means you send sats in a circle: out through one of your channels, in through another of your channels. This obviously cannot work in the configuration you drew, because you have 2 BTC outbound balance and 0 BTC inbound. Start by returning 50% of each channel or 100% of either one of the two channels onchain. You can do that via a swap at https://swapmarket.github.io.

More advanced skill is to rebalance via liquid.

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