Trustlines Explanation

#1

Hello, I’m attempting to simplify a lot of the documentation surrounding Interledger and am failing to see a good explanation of how a trustline works or what it really is.

The definition I have found is the following - https://interledger.org/rfcs/0022-hashed-timelock-agreements/#trustlines, but it really just says that you trust the other party. So, is a trustline a payment channel where one side has an on-chain channel and the other does not and you just have an audit log of the transactions sent between the two of you?

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#2

Good question. I think that terminology and the breakdown of HTLA types listed there are probably not the best ways to describe Interledger post-ILPv4.

Now, I might say something more like: Interledger packets create obligations to pay between directly connected peers. Peers can choose to settle those obligations using whatever method and with whatever frequency they want. If two peers trust one another more, they may choose to forward a higher value of ILP packets before settling. This type of relationship could use a slower and more expensive settlement method, such as on-ledger transfers using a blockchain or a more traditional ACH transfer. Alternatively, two peers can settle very frequently and operate on minuscule amounts of credit. For example, peers using a payment channel on a blockchain could settle for every packet, keep the packet amounts small, and then one of the parties would only need to trust the other for the small packet amount at one time.

The original idea of “trustlines”, as described in that doc, refer to building up balances and then settling using some slower mechanism. ILPv4 lumped both trustlines + on-ledger settlement and unconditional payment channels into the category of “mechanisms for settling ILP packets”. ILPv4 no longer really supports conditional on-ledger transfers or conditional payment channels.

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