HTLC

Hashed Time-Lock Contracts, or HTLCs, are a mechanism used in state channels and cross-chain bridges to ensure atomic swaps. They require the recipient of a payment to acknowledge receipt before a deadline by providing a cryptographic secret.

If the secret is not provided within the specified time, the funds are automatically returned to the sender. This ensures that a transaction either happens completely or not at all, preventing the loss of funds.

HTLCs are the backbone of the Lightning Network and other state channel implementations. They facilitate trustless payments across different channels and even different blockchains.

By using time locks and hash locks, they provide a secure way to move value without intermediaries. They are a foundational tool in the architecture of off-chain financial systems.

Their design is essential for maintaining safety in asynchronous payment networks.