Payment Channel

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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]

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]

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 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