State Channel Basics
Connext is a network of state channels. The core concept behind a channel is very simple:
- Suppose you're paying your friend Bob for a metered service at the rate of \$1 every minute.
- It would be silly to broadcast every transaction to the blockchain, you would incur lots of fees. At the same time, it also doesn't make sense to pay up front or pay at the end, as that would introduce new trust assumptions.- Instead, what you can do is send your funds to a 2/2 multisig controlled by you and Bob. Then, rather than sending onchain transactions, you can send Bob ever updating signatures which give Bob the ability to withdraw up to a certain amount from the multisig.
- Because Bob can get his funds at any time using his unbreakable commitment from you, you complete a new payment to him every time you send a new signature.
Basic channel between Alice and Bob
Connext Core Concepts
Connext extends this concept in a couple of ways:
- Updates within the channel can have any arbitrary conditionality to them. This means you could make your payments conditional upon Bob providing a proof of his work, or based on some real world event, or even based on the outcome of a chess game.
- More importantly: the above paradigm requires you to deploy a new multisig with each new person you transact with. Using the conditionality described above, Connext instead lets you use your channel with Bob to atomically interact with anyone that Bob also has a channel with. For instance, you pay Bob $1, who pays Charlie $0.9999 (Bob takes a microfee), who pays Danielle $0.9998 (Charlie takes a microfee).
There's a lot more information available publicly on state channels, here are some great resources: