A bidirectional and trustless payment channel is the core building block of the Lightning Network. There are 3 well known methods to construct payment channels.
Poon Dryja Channels[edit | edit source]
The Poon Dryja channels are the ones that are currently being implemented in the lightning network. They punish malicious behaviour with a penalty based revocation based system making use of RSMCs and are presented and discussed in the lightning network whitepaper
Decker Wattenhofer[edit | edit source]
Based on the idea of invalidation trees and first presented on the ETH Zurich in A Fast and Scalable Payment Network with Bitcoin Duplex Micropayment Channels
Eltoo[edit | edit source]
Eltoo tries to reduce the complexity of the penalty based payment channels by dynamically binding settlement transactions to funding transactions. While elegant this method requires a bitcoin softfork. Eltoo was first presented via Blockstream in this publication