A Payment Channel Network is a layer-2 scaling architecture in which participants open bilateral payment channels and route payments across a graph of connected channels without settling each transaction on the underlying blockchain. Funds are locked in multisignature channels, and balances update off-chain through signed state, with only channel opening and closing recorded on-chain. This enables high-throughput, low-fee, near-instant payments while inheriting base-layer security.
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- Participants lock funds in multisignature channels and exchange signed balance updates off-chain, committing only channel opens and closes to the base layer. Routing payments through intermediary channels yields near-instant, low-fee transactions while inheriting the settlement security of the underlying chain.