Micropayment Channels

Off-chain state channels for high-frequency, low-value payments. Essential for per-token AI billing and streaming payment use cases.

Overview

Micropayment channels allow two parties to exchange many small payments off-chain, settling only the final balance on-chain. This reduces gas costs and enables real-time per-token billing for AI inference.

Channel Lifecycle

Open: Sender deposits TNZO into escrow, creates channel
Update: Off-chain state updates with signed balance changes
Close: Either party submits final state on-chain
Settle: Escrowed funds distributed per final state

Key Properties

Unlimited off-chain updates during channel lifetime
On-chain settlement only on channel close
Nonce-based ordering prevents replay of old states
Time-locked dispute resolution window
Automatic close on channel expiry

Use Case: Per-Token AI Billing

When a user requests AI inference, a micropayment channel is opened with an initial TNZO deposit. As tokens stream from the model, the channel state is updated with each token, charging the exact amount. When inference completes, the channel is closed and the final balance settles on-chain.

// Per-token billing flow
1. User opens channel: deposit 10 TNZO
2. Model generates token 1: state update → 9.999 TNZO remaining
3. Model generates token 2: state update → 9.998 TNZO remaining
   ... (hundreds of updates, all off-chain)
4. Inference complete: close channel
5. On-chain settlement: user receives 8.5 TNZO refund
   Provider receives 1.5 TNZO payment

Code Examples

Open a Channel

use tenzro_settlement::MicropaymentChannelManager;

let manager = MicropaymentChannelManager::new(storage);

// Open channel with 10 TNZO deposit
let channel = manager.open_channel(
    sender,
    receiver,
    Amount::tnzo(10.0),
    Duration::from_secs(3600), // 1 hour TTL
)?;

println!("Channel ID: {}", channel.id);
println!("Escrowed: {} TNZO", channel.escrowed_amount);

Update State (Off-Chain)

// Each token generation triggers a state update
let new_balance = current_balance - token_cost;
let nonce = nonce + 1;

// Both parties sign the new state
let signature = wallet.sign_state_update(
    &channel.id,
    new_balance,
    nonce,
)?;

manager.update_state(
    &channel.id,
    new_balance,
    nonce,
    signature,
)?;

Close and Settle

// Close channel and settle on-chain
let receipt = manager.close_channel(&channel.id)?;

println!("Settlement tx: {}", receipt.tx_hash);
println!("Sender refund: {} TNZO", receipt.sender_amount);
println!("Receiver payment: {} TNZO", receipt.receiver_amount);
println!("Network fee: {} TNZO", receipt.fee);

Channel Parameters

Parameter	Description	Default
Min Deposit	Minimum TNZO to open channel	0.1 TNZO
Max Duration	Maximum channel lifetime	24 hours
Dispute Window	Time to challenge close state	1 hour
Network Fee	Fee on settlement amount	0.5%