Starlight: A Payment Rail Enabling Secure and Private Transactions on Stellar

On October 26, 2018, Interstellar, the product of Stellar’s acquisition of Chain, announced a new implementation called “Starlight” that allows for secure and private bidirectional payments on the Stellar protocol.

Payment Channels
The whole purpose of these payment channels is to allow different parties to privately and securely transact with zero fees and without having to trust the other party.

Thanks to the Jeremy Rubin, Jed McCaleb, Nicolas Barry, David Mazières, Akash Khosla, and others, the Stellar Network offers a payment channel that allows two users to trade between themselves without having to rely on the network.

Unlike standard transactions, that involves fees and revealing information accessible to all observers as it needs to be confirmed by the network, Starlight will give users the chance to open a payment channel to transact privately.

The payment channel uses the network to “lock up” the funds to be used by participants active in the channel. Once the two participants engage in a payment channel, they can transact without further involving the network, making this solution a private, instant, and free payment solution.

The security of the channel by information that is validated by the network which includes signed Stellar transactions that are not published to the network before the original payment channel is closed. Once the two participants finish their bid, the payment channel closes, and the transactions are sent to the network and validated to be inscribed on the blockchain.

While the network can see what amount was allocated to the payment channel, the whole transaction history is not accessible as only the final settlement balances are revealed to the network when the channel closes. This means that all other activity remains private and only known to the participants.

The Interstellar team said that the Starlight payment channels are much like the Bitcoin payment channels in use in the Lightning Network. Further support will be focused on extending the support to not only payment channels, but also multi-hop payments across these channels. Interstellar is also looking to continue its development with its eyes set on building compatibility with other payment-channel networks, such as Lightning and Interledger.

Starlight Wallet Demo
Interstellar also released a preview for the Starlight wallet. The demo supports bilateral channels and includes the Starlight payment channel software as well as a built-in wallet application. With this demo, users can try out the Starlight payment channel.

For now, the demo only allows transactions in lumens, and its future versions will support any asset issued on the Stellar network.

It is still an early demo release and doesn’t include all the options that the Starlight implementation will allow. Starlight only connects to the Stellar testnet, so that there is no risk of losing real funds to a software bug. Anyone can read and download and try the Starlight application here.