Stellar wants to become the world’s digital payment rail, and it is already the most deployment-ready of the major platforms, but given the scale of the expected future of Stellar, multiple efforts have to be undertaken to keep advancing the technology.
Scalability—namely, how best to achieve it—has been at the center of some of the most bitter disagreements in blockchain. Stellar tried to approach the problem with an open mind. To the extent an idea improves what the users care about—speed, throughput, privacy—Stellar Team will explore it, and since a typical Lightning payment can be confirmed instantly, has negligible fees and doesn’t have to become public, the protocol has always been a subject of interest. As said in Stellar’s 2018 Roadmap it’s now clear that Lightning is the right way forward.
How Lightning Works
Lightning is a scaling solution for distributed payment networks, originally proposed for the Bitcoin blockchain. Lightning is designed to allow users to make off-chain payments through routers and hubs. Lightning even has the potential to support cross-protocol payments, such as a payment where the sender sends Bitcoins on the Bitcoin network and the recipient receives lumens on the Stellar network, without having to trust any parties in between.
Lightning is constructed from building blocks known as payment channels. The concept behind payment channels is simple but powerful. They allow users to open a channel off-chain and transact there instead of on the public ledger. Because they’re off-chain, transactions in the channel can be extremely fast and cheap, but similar to on-chain transactions, there’s no counterparty risk. When the channel participants are ready to go their separate ways, they close the channel and settle back to the public ledger. No matter what happened in-channel, the rest of the world only sees that final transaction.
Stellar supports a more flexible generalization of payment channels called state channels, meaning that any operation you can execute on the Stellar network (such as not only payments, but also creating, deleting, or changing permissions on accounts), you can execute within a payment channel.
Stellar’s state channel implementation relies on the fact that every Stellar transaction specifies a source account and a sequence number.
For further details about the technicalities behind the state channels on Stellar, check out the below article.