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0 sats \ 4 replies \ @OT 9 Jan \ on: PeerSwap Economics: Comparison with LOOP (and the problem with Rebalancing) lightning
So basically you can save more on fees if you use liquid instead of an on chain TX.
save more on fees, avoid abusing the network (and your node partners) with fake traffic, and still get your on-chain BTC if you want it there--all much cheaper and more reliably than using LOOP.
Yesterday, we tried to use LOOP out to get some of BTC back on-chain and address the liquidity imbalance of the 19 channels we batch opened recently. LOOP errored out at 90M, 80M, 70M, 60M, 50M, 40M, and then we gave up because the fee rate just became stupid for the benefit.
Even if we are willing to pay over 200K sats to loop out, the network doesn't support it:
broken. There has to be capacity from all the channels you want to loop out to the LOOP node, which takes multiple hops and consumes everyone's liquidity.
You can open a LOOP channel yourself, but then you are only able to reliably loop out the size of your own channel, which defeats the purpose.
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It's a decent deal to join with the peerswap group and get the L-BTC that someone has already converted and hold that as a bank of rebalance source material. For sure, conversions back and forth are better when done at low fee time--and since this is just on-chain maintenance rather than node communication timeout based transactions, you don't have to worry that it MUST complete within a given timeframe (like you do with channel open) so you can process these in batch and at low fee when convenient.
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