Mastering Blockchain - Second Edition

State channels

This is another approach proposed for speeding up the transaction on a blockchain network. The basic idea is to use side channels for state updating and processing transactions off the main chain; once the state is finalized, it is written back to the main chain, thus offloading the time-consuming operations from the main blockchain.

State channels work by performing the following three steps:

1. First, a part of the blockchain state is locked under a smart contract, ensuring the agreement and business logic between participants.
2. Now off-chain transaction processing and interaction is started between the participants that update the state only between themselves for now. In this step, almost any number of transactions can be ...