Couple of days ago, Stellar community on Reddit and elsewhere got notified about a new project launched on the Stellar network – Starlight. The simple explanation of Interstellar is that it is Stellar’s version of Lightning Network.
The channels are private bidirectional paths for two parties to instantly pay each other funds in a private manner and for free without involving the Stellar network before the final settlement that is done on the blockchain itself.
Payment channels allow parties to transact privately, instantly, and securely, while paying zero fees. They are also a first step toward constructing and connecting to payment channel networks like Lightning and Interledger.
McCaleb stated on Reddit:
I have seen a few people ask why we are building a lightning like state channel protocol for Stellar. Interstellar just released an awesome first draft of an implementation here: https://github.com/interstellar/starlight
There are 3 main reasons we are working on this:
1) Privacy. We imagine most of the use of Stellar will be between financial institutions. Almost all will have privacy concerns if every transaction is broadcast to the public network. Starlight gives them away to still transact in a trustless manner but keep the transactions off the public chain.
2) Scalability. Although Stellar scales really well compared to many other blockchain solutions, there are really a lot of payments made in the world and it doesn’t seem feasible or even desirable to have them happening all on the ledger. Stralight will allow the use of Stellar to scale much much further than keeping everything on the ledger.
3) Interoperability. We don’t think the world will end up with just one blockchain or one distributed ledger. Interoperability between them will become increasingly more important. Starlight puts us on the path to implement that.
The roadmap for Starlight is extensive as they plan to add channels for non-native assets (coins that are not based on Stellar blockchain) along with cross-channel and cross-currency atomic payments. One of the major goals, as stated by McCaleb, is the interoperability with other layer 2 solutions from other blockchains like Interledger and Lightning.
One of the things that didn’t get too much attention is the fact that once the channels are operative and have some capacity, each payment channel will lock up a certain amount of funds decreasing the supply of XLM which will probably be followed by increase in price!
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