Bitcoin Lightning payment channels are coming to Cardano

Payment channels similar to Bitcoin (BTC) Lightning are coming to Cardano (ADA) by means of a new state channel architecture dubbed Cardano Lightning.

Currently in pre-production deployment, the system was presented in detail during an August 24 Cardano Community livestream featuring PolyCrypto software engineer Ilja von Hoessle.

At its core, Cardano Lightning consists of bidirectional payment channels that allow two parties to send and receive payments directly. More precisely, either party can close a channel at any time, without putting the other party’s funds at risk.

“Bitcoin itself is slow, but it’s secure. What you’d ideally like to do is to temporarily have it on other chains to trade with it, use it as collateral, and so on, and still enjoy the security that Bitcoin has. And Lightning…means that you can be secure but also very fast and pay few or zero fees,“ von Hoessle said.

The real power of the solution comes from connecting these channels into a network and allowing payment routing through multiple participants without requiring a direct channel between the sender and recipient.

What is Cardano Lightning?

As von Hoessle further explained, the Cardano Lightning foundation is the Lightning Development Kit (LDK), an existing SDK that provides the capabilities needed to build and customize Lightning nodes. To be exact, Cardano Lightning is based on a fork of the LDK Node, which allows it to take advantage of its already mature codebase and flexibility.

On top of the LDK, the developers added two key components: a Rust-based relay that facilitates communication and coordination across the Lightning network, and a Cardano smart contract that acts as a liquidity manager for the network.

“The LDK node, which is a fantastic code base, beautifully maintained… You have a lot of customizability to build your own lightning nodes as you wish,” he added.

Together, these components provide the foundation for running Lightning nodes and managing the liquidity required to support Lightning payments on the network. This way, Cardano Lightning can enable fast, low-cost payments across a network of interconnected channels and at the same time extend the reach of individual payment channels beyond the parties directly connected to them.

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