Stellar Protocol 19 enables payment channels through CAP-21 and CAP-40, allowing off-chain transactions at 1.19 million payments per second while maintaining cryptographic security. Starlight demonstrates this capability with only three on-chain transactions needed regardless of channel activity.
Stellar's June Protocol 19 upgrade implemented CAP-21 (Generalized Transaction Preconditions) and CAP-40 (Ed25519 Signed Payload Signer), enabling payment channels that process transactions off-chain at massive scale. CAP-21 introduces flexible sequence number handling and relative timelocks for dispute resolution, while CAP-40 simplifies multi-signature exchanges. Starlight, SDF's Layer 2 payment channel protocol, achieves 1.19 million payments per second between two parties, compared to Stellar's 200 TPS on-chain. Payment channels require only three on-chain transactions (open, declaration, close) regardless of off-chain activity volume, reducing network congestion while maintaining full cryptographic security. Starlite, a web-based prototype, demonstrates the speed and finality of payment channel transactions.
