State Channel
A Layer 2 technique letting parties transact off-chain instantly and settle the final result on-chain — the idea behind Lightning.
A state channel lets two (or more) parties open a channel by locking funds on-chain, then transact between themselves off-chain — instantly and with no per-transaction fees — updating a shared state they both sign. Only the opening and final settlement touch the blockchain; everything between is off-chain.
Bitcoin’s Lightning Network is the flagship application, enabling fast, cheap micropayments. State channels excel for high-frequency interactions between defined participants (payments, gaming) but don’t suit open, many-party applications the way rollups do — you must know your counterparties and keep funds locked. They’re an elegant scaling approach for the specific case of repeated transactions between fixed parties.