Statechains
Statechains are a scaling solution that allows transferring bitcoin ownership off-chain through a federated service without requiring on-chain transactions for each transfer.
Statechains enable off-chain bitcoin transfers:
Concept:
- Lock bitcoin on-chain once
- Transfer ownership off-chain
- No on-chain transaction per transfer
- Federated service manages state
How Statechains Work
Initial Setup
1. User locks bitcoin on-chain
2. Creates statechain entry
3. Federated service holds key share
4. User holds key share
Transfers
1. User transfers to recipient
2. Key shares updated off-chain
3. No on-chain transaction
4. Recipient can continue transferring
Unlocking
1. User wants to unlock
2. Cooperates with federated service
3. Creates on-chain transaction
4. Bitcoin unlocked
Benefits
Advantages
- No on-chain fees: Per transfer
- Fast transfers: Instant off-chain
- Bitcoin native: Uses real bitcoin
- No channel limits: No liquidity constraints
Limitations
- Federated trust: Requires trusted service
- Key management: Complex key sharing
- Limited adoption: Early stage technology
Comparison
| Feature | Statechains | Lightning | Sidechains |
|---|---|---|---|
| Trust | Federated | Trustless | Varies |
| Fees | Low | Very low | Sidechain fees |
| Speed | Instant | Instant | Block time |
| Complexity | High | Medium | High |
Related Topics
- Sidechains - Alternative scaling
- Lightning Network - Payment channels
- Privacy Techniques - Privacy improvements