How does circular rebalance on LN work?
How does circular rebalance on LN work? (note: circular rebalance is term used in RTL, I use lnd). Let me describe the situation that happened to me:
I have two channels, one with Alice, one with Bob.
The situation before circular rebalance from my point of view:
Me (200) sats outbound -----[400]----- (200) sats inbound Alice
Me (200) sats outbound -----[200]----- (0) sats inbound Bob
Then I initiated a circular rebalance of 100 sats on the the second channel with Bob and I was asked to choose "receive from peer" where I chose Alice
The situation after the circular rebalance from my point of view (supposing no routing fees):
Me (300) sats outbound -----[400]----- (100) sats inbound Alice
Me (200) sats outbound -----[300]----- (100) sats inbound Bob
My overall outbound capacity increased by 100 sats while overall inbound capacity stayed at 200 sats. Did I just make 100 sats? Did I cheat Alice?
Solution (It was my misunderstanding, I’m answering here because Rene’s answer is really good and I want to keep it):
Basically, my outbound capacity decreased on the channel with Bob by the expected amount but the commit_fee on that channel rose by 100 and since I thought that my outbound capacity + commit fee are my disposable funds I thought of them as a overall outbound capacity which is not obviously the case.
What actually happened:
The situation before circular rebalance from my point of view:
Me (200) sats outbound {100} commit fee -----[500]----- (200) sats inbound Alice
Me (400) sats outbound {100} commit fee -----[500]----- (0) sats inbound Bob
The situation after the circular rebalance from my point of view (supposing no routing fees):
Me (300) sats outbound {100} commit fee-----[500]----- (100) sats inbound Alice
Me (300) sats outbound {200} commit fee-----[500]----- (100) sats inbound Bob
