Lightyear-formed company Interstellar has partnered with Chain to release Starlight, a new form of software that allows bi-directional payment channels via Stellar.
How Does It All Work?
The company made the announcement on its official blog, stating:
Interstellar is pleased to announce a preview release of Starlight, an implementation of bidirectional payment channels on Stellar. Payment channels allow parties to transact privately, instantly and securely while paying zero fees.
Normally, making a payment on a network like Stellar involves publishing details of the payment to all observers, paying a small fee and waiting for the network to reach consensus and confirm the payment. A payment channel, on the other hand, uses the network to ‘lock up’ some funds for use by the channel’s participants. They may then pay each other these funds without further involving the network. Such payments are thus private, instant and free.
Information Kept Private
Following a transaction, both parties involved are required to sign off on the details, which are then officially registered. The information is not broadcast to anyone outside those directly involved in the transaction (the payer and the receiver) unless one of the participants decides to close the corresponding channel, and even then, only the opening transaction and the settlement balance is made available to the network. All other activity remains private and safe.
Once the channel is closed, a settlement transaction occurs, in which any remaining funds are later sent to each party’s respective Stellar address.
A demonstration of the Starlight wallet, courtesy Interstellar.
Ideas for the Future
Starlight’s payment channels are being compared with those of the Lightning Network for Bitcoin. Starlight has also announced that it plans to enable “multi-hop payments” across payment channels, a feature that eliminates the need for direct one-to-one connections to settle future payments. It was also designed to combat inefficient management of global liquidity.
The Ripple Network recently made headlines when multi-hop payments were integrated on its system in conjunction with Siam Commercial Bank in Thailand, the latest establishment to join Ripple’s growing list of traditional finance partners.
Starlight is also looking to establish relationships with Interledger, Lightning, and similar payment platforms in the future.
A Few Issues to Watch Out For
The company’s blog reads:
This preview release supports bilateral channels (channels with exactly two participants). It includes the Starlight payment channel software, as well as a built-in wallet application… It allows transacting in lumens only (the native asset of the Stellar network). Future versions will support any asset issued on the Stellar network.
As this is an early demo release, the platform has stated that users can expect bugs and small technical issues along the way, as well as regular software updates. In addition, Starlight only connects to the testnet rather than the mainnet, and thus it shouldn’t be used on the mainnet yet due to the risk of losing funds.
Stellar Throughout Autumn
October has been something of a mixed bag for Stellar. The platform’s currency XLM experienced a 2 percent decline earlier this month, though many analysts remain adamant that Stellar could break out of its bearish hold in the nearing weeks.
Stellar had initially acquired Chain and established Interstellar back in September of this year.