How are failed transactions treated on Interledger?
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When you send an ILP Prepare packet, you will either get a Fulfill or Reject packet back. If it’s a Fulfill, you know your transaction made it to the receiver. If it’s a Reject, meaning that the transaction failed for some reason, no money will have been transferred and the balances along the path will be restored to their previous state. Reject packets include error codes to help the sender figure out why the Prepare didn’t go through.
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Just to add to Evan’s comments, the above is what happens on the lower level of an ILP transaction. Higher levels like STREAM will take this into account and will be able to gracefully handle failed packets by proceeding to send more packets if some are rejected.
Currently there is a scenario where a failed transaction creates risk between two peers and that is if a failure occurs when a fulfillment is being passed back to the sender.
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