Description
State channels are a technology used to scale peer-to-peer blockchain interactions, enabling instant transactions on networks like Ethereum. Nitro channels are a technology which allows for ultra-low cost, near-zero-latency conditional transfer of cryptoassets. They work by allowing users to deposit their funds into a "layer 2" network which sits above a blockchain. This layer 2 network inherits many of the properties of the underlying chain -- for example, permisionlessness and the lack of a need to place trust in any counterparty. The network benefits from significant advantages, however -- in a fraction of a second, a direct, private connection can be forged with anyone else in the network. Then, payments can be streamed incredibly fast: up to hundreds of times per second. What's more, there is no per-payment fee to cover (just a small fee per unit time for maintaining the connection). This is in contrast to the experience of transacting publicly on a "layer 1" blockchain or even on a rollup chain. There, fees and latency apply to each and every action.