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Loop Out explained.

Lightning Loop is a non custodial service offered by Lightning Labs to bridge on-chain and off-chain Bitcoin using Submarine swaps.

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Step 1: Deciding to Loop Out

You have a channel with a local balance amount and you want to gain inbound liquidity.

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Step 2: Send lightning payment

Your node pays a lightning invoice for the amount requested via the loop service. This moves the local balance, for the amount paid, to the remote side of the channel.

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Step 3: Receive funds back on-chain

Loop service then sends you a payment on-chain for the amount same as the lightning payment minus the fee.

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Done!

Final settlement occurs when your node sweeps the on-chain payment and the loop server settles the lightning invoice. You receive the payment on-chain in your wallet and also move local balance to the remote side of the channel, gaining inbound capacity.