Routing & HTLCs Deep Dive

14 min readarticleIncludes quiz · 2 questions

Lightning routing enables payments to travel across multiple channels, creating a network effect that scales Bitcoin transactions globally. The secret sauce is Hash Time Locked Contracts (HTLCs).

How routing works:

1. Source Routing: Sender finds path to receiver 2. HTLC Creation: Each hop creates conditional payment 3. Secret Sharing: Payment secret flows back along path 4. Settlement: Each hop settles when secret is revealed 5. Cleanup: Failed routes are automatically cleaned up

HTLC components:

  • •Hash Lock: Payment conditional on revealing preimage
  • •Time Lock: Expiry mechanism to prevent stuck payments
  • •Atomic Execution: Either entire payment succeeds or fails
  • •Fee Structure: Each hop charges small routing fee

Route finding algorithms:

  • •Dijkstra's Algorithm: Find shortest path by fee
  • •Multi-path Payments: Split payment across routes
  • •Liquidity Probing: Discover available channel capacity
HTLC Implementation Example
# HTLC Output Script
OP_DUP OP_HASH160 <H> OP_EQUALVERIFY OP_CHECKSIG
OP_IF
  <recipient_pubkey>
OP_ELSE
  <timeout> OP_CHECKSEQUENCEVERIFY OP_DROP
  <sender_pubkey>
OP_ENDIF

# Payment flow
def create_htlc(amount, hash_lock, timeout, recipient, sender):
    return ConditionalPayment(
        amount=amount,
        condition=hash_lock,
        timeout=timeout,
        recipient=recipient,
        fallback=sender
    )

Test Your Knowledge

This lesson includes a 2-question quiz (passing score: 85%).

Quiz functionality available in the mobile app.