🔄 Channel Lifecycle: Open, Update, Close
Understand the three phases of state channel operation
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0 / 5 completedChannel Lifecycle: Open, Transact, Close
Understand the complete lifecycle of a state channel from opening to closing, and how funds flow through each stage.
🎮 Lifecycle Stage Simulator
Step through the four stages of a state channel lifecycle. Navigate at your own pace to understand how funds move through the system.
Channel Opening
Step 1/4Both parties deposit funds into smart contract
💰 Balance Transfer Simulator
Try transferring funds between Alice and Bob within the channel. Notice how balances update instantly without blockchain transactions.
🔄 The Four Lifecycle Stages
Opening
Participants deploy a multisig contract and deposit funds. This requires one on-chain transaction per party (~$2-5 gas fee each).
Transacting
Parties exchange unlimited signed state updates off-chain. Each update represents a new balance distribution and is instantly verified.
Updating
Each transaction creates a new signed state with sequence numbers. Only the latest valid state with both signatures matters.
Closing
Either party submits the final state to the contract, which verifies signatures and distributes funds accordingly after a challenge period.
⚙️ Technical Details
Sequence Numbers
Each state update includes an incrementing nonce to prevent replay attacks and ensure the latest state is recognized.
Digital Signatures
Both parties must sign each state update with their private keys, creating cryptographic proof of agreement on the balance distribution.
Challenge Period
When closing, there's typically a 24-hour window where the other party can challenge with a newer state if someone tries to submit an old one.
Locked Liquidity
Funds are locked in the channel for its duration. You can't use that capital elsewhere until the channel closes, which is the main trade-off.