- Starlight system enables off-chain, immediate and free bi-directional payments
- Early demo release
- Multi-hop payment options in the pipeline
Developers at Stellar, the sixth largest cryptocurrency in the world, have unveiled the first phase of a second-layer payments system that may have the potential to revolutionise money transfer services.
The new offering, Starlight, a second-layer payments system developed by Lightyear, the for-profit subsidiary of the Stellar Development Foundation, opens the door to immediate off-chain transactions with zero fees.
Stellar now joins the ranks of Litecoin and Bitcoin, both of which have been experimenting with off-chain money transfer online transactions as a means of overcoming their longer block times and rising fees.
Participants who use off-chain payment rails pay no fees because, unlike conventional blockchain international money services, there is less processing. Users of blockchain-enabled networks like Stellar usually begin by publishing details of the payment to all observers, paying a fee, and then pausing while the network works its way to a consensus to confirm the payment.
With payment channels, however, some funds are “locked up” (escrowed) in a multi-signature wallet on the network for use by channel participants, who can then pay one another these sums without any additional involvement of the network. As soon as the channel is closed, a settlement transaction takes place wherein any remaining funds are transferred to each party’s Stellar addresses. In other words, these bidirectional payments are private, instantaneous and free.
It should perhaps be noted that the new offering is still at an early stage of development. There are complexities to be ironed out before mass uptake for international money transfers can be enabled, chiefly because when more than two participants are involved, everything gets significantly more convoluted, Gordian knot-style. The Lightning Network, for instance, has discovered that multi-hop payments are its Achilles’ heel, resulting in unexpected complications and lengthy delays.
For the time being, Starlight is designed for two-party transactions only, although the Medium blog post by Interstellar coder Dan Robinson announcing the system strongly hints that this is but an initial step: “Starlight payment channels are analogous to the Bitcoin payment channels used in the Lightning Network. As we extend the Starlight project to support not only payment channels but also multi-hop payments across those channels, we plan to build in compatibility with other payment-channel networks, such as Lightning and Interledger.”
The Ripple Network made media ripples recently when it integrated multi-hop payment capabilities on its system in collaboration with Thailand’s Siam Commercial Bank, one of the newest institutions to join Ripple’s fast-growing roster of traditional finance partners.
As Robinson’s blog makes clear, though, at present Starlight is an early demo release, allowing transactions in Stellar Lumens only (the Stellar network’s native asset). While future versions supporting any asset issued on the Stellar network are already in the development pipelines, for the time being, Robinson cautions that users are bound to encounter bugs and small technical glitches, plus regular software updates as the developers work to rectify both.
For the time being, Starlight connects only to Stellar’s testnet, not the mainnet, where funds could be lost until all glitches have been ironed out.
If Stellar can succeed in developing free, instant, private payments for people wishing to send money abroad, the legacy leviathans in the cross border payments space may start to get distinctly nervous.
If you’ve enjoyed reading about Stellar, you might like our recent article here.
