Channels are one of the earliest blockchain scaling proposals. Originally taking the form of payment channels, they can be extended to arbitrary computation with state channels. A fixed set of participants open a channel with an on-chain transaction that defines the rules of the channel. Updates to the channel state are made by unanimous consent: all participants signing a state update, communicated off-chain. Any participant may attempt to close the channel on a particular state, which starts a timeout during which anyone may submit a later state to penalize a fraudulent channel close attempt. If no later state has been shown by the timeout, the channel closes, settling balances based on the closing state.
