Real Lightning-style payment channels with HTLC support inside channel state. Open with one on-chain transaction, then send unlimited off-chain co-signed payments, including conditional payments, with your counterparty. Only the open and the close (or a dispute) touch the chain. Channel state can carry up to 16 pending HTLCs at any time.
Open channel (on-chain) Send 100 micro-payments (off-chain) Close channel (on-chain)
───────────────────── ────────────────────────────────── ─────────────────────────
A deposits 1 AERE ───► state #1: A=0.99 B=0.01 (signed) A submits state #100
state #2: A=0.98 B=0.02 (signed) ↓
[1 tx] ... challenge window 1 day
state #100: A=0.5 B=0.5 (signed) ↓
settle → balances paid
[0 tx, no fees, instant] [1 tx]
Lightning routing fits into the same state machine, payments hop across channels by inserting
HTLCs into each hop's state, then resolving them once the preimage propagates back.