the transaction speed of the entire network is about 7 transactions per second, which is much lower than the traditional financial transaction system; at the same time, waiting for the trusted confirmation of 6 blocks will result in a final confirmation time of about 1 hour.

Thus, the Lightning Network appeared.

Lightning Network mainly improves off-chain transaction channels by introducing the idea of smart contracts. There are two core concepts: RSMC (Recoverable Sequence Maturity Contract) and HTLC (Hashed Timelock Contract). The former solves the confirmation problem of off-chain transactions, and the latter solves the problem of payment channels.

Recoverable Sequence Maturity Contract, "Revocable Sequence Maturity Contract". Similar to the fund pool mechanism. First assume that there is a "micropayment channel" (fund pool) between the two parties to the transaction. Both parties to the transaction first pre-deposit a portion of the funds into the "micro-payment channel". Initially, the distribution plan of both parties is equal to the pre-deposited amount. Every time a transaction occurs, it is necessary to jointly confirm the result of the distribution of funds generated after the transaction, and at the same time sign to invalidate the distribution plan of the old version. When any party needs to withdraw, it can write the transaction results signed by both parties into the blockchain network to be confirmed. Any version of the scheme needs to be authenticated by the signatures of both parties to be legal. Any party can make a withdrawal at any time. When withdrawing, a fund allocation plan signed by both parties must be provided (meaning that it must be the result of a certain transaction, confirmed by both parties, but not necessarily the latest result). Within a certain period of time, if the other party produces a certificate indicating that the plan has been invalidated before (not the latest transaction result), the funds will be confiscated to the questioning party; otherwise, it will be distributed according to the result of the proposing party. The slashing mechanism ensures that no one will deliberately withdraw an old transaction result. In addition, even if both parties confirm a certain withdrawal, it is first proposed that the funds of the withdrawing party will arrive later than the other party, which encourages everyone to complete the transaction outside the chain as much as possible. Through RSMC, a large number of intermediate transactions can be realized off-chain.

The micropayment channel is implemented through the Hashed Timelock Contract, which is actually a time-limited transfer. Through the smart contract, the two parties agree that the transfer party first freezes a sum of money and provides a hash value. If someone can come up with a string within a certain period of time, so that its hash value matches the known value, the money forwarded to the recipient.The HTLC mechanism can be extended to multiplayer scenarios.

RSMC ensures that direct transactions between two people can be completed off-chain, and HTLC ensures that transfers between any two people can be completed through a "payment" channel. Lightning Network integrates RSMC and HTLC to ensure that transactions between any two people are completed off-chain.