Lightning Network - DCR Comic 8

The Lightning Network makes your DCR go fast! How does this second layer solution work and what can we expect in the future?

01 - Lightning Network is a 2nd layer network. It uses smart contracts in order to move transactions off-chain but retain the same guarantees that Proof-of-Work and Proof-of-Stake enable in the base layer.

02 - Blockchains like Decred have to limit the number of transaction they process, because otherwise it would be too hard for users to run their own nodes.

03 - The Lightning Network is not a "one-size fits all" solution. The original code had to be customized and ported to the Decred chain.

04 - Off-chain, without the blockchain limits, transactions become almost instant and costless.

05 - Two LN nodes can open a payment channel by publishing a special TX that creates the smart contract.

06 - One of them funds the channel and once it is open, they can instantly update the state as many times as required.

07 - Any party can close the channel at any time by publishing the latest state to the blockchain. Each one gets their share of the contract.

08 - Multiple interconnected channels create the Lightning Network, which can route payments between two users without them having to open a direct channel.

09 - The Lightning Network is not a solution to every problem, but it will allow for an unlimited number of smaller transactions to be processed quickly off chain, opening up many new use cases. In the future, this tech could enable more than DCR payments, lowering the barriers to participate in governance and even creating bridges with other chains.