"In 2025, subnetworks are emerging that revive the impetus of channel factories with some new details that vastly increase their potential. They are natively interoperable with Lightning and achieve greater scale by allowing a group of participants to open a shared multisig UTXO and create multiple bilateral channels, which reduces the number of on-chain transactions and improves capital efficiency. Achieving greater scale by reducing complexity, Ark and Spark perform the same function as traditional channel factories with new designs and additional capabilities based on shared UTXOs."
"Channel factories have been around since the inception of Lightning. A factory is a multiparty contract where multiple users (not just two, as in a Dryja-Poon channel) cooperatively lock funds in a single multisig UTXO. They can open, close and update channels off-chain without updating the blockchain for each operation. Only when participants leave or the factory dissolves is an on-chain transaction needed"
Lightning Network scale is constrained because each payment channel requires an on-chain transaction to open and usually another to close, increasing blockchain pressure as adoption grows. Channel factories enable multiple users to cooperatively lock funds in a single multisig UTXO and create many bilateral channels off-chain, allowing open, close and updates without blockchain transactions except when participants leave or the factory dissolves. In 2025, subnetworks such as Ark and Spark apply shared-UTXO designs that are natively interoperable with Lightning, reduce on-chain transactions, and improve capital efficiency by enabling greater scale through reduced complexity.
Read at Bitcoin Magazine
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