Definition
Eltoo, also known as LN-Symmetry, is a proposed redesign of how Lightning payment channels enforce their current balance. In today's channels, security rests on a penalty mechanism: if a counterparty broadcasts an outdated state to claim more than they are owed, the wronged party can punish them by taking the entire channel balance. Eltoo replaces this adversarial model with a simpler one in which any later channel state can simply override any earlier state.
Symmetric state replacement
The name is a play on "L2" and the idea that state numbers only ever increase. Each update transaction is built so that it can spend the output of any prior update, letting the most recent state always settle on-chain regardless of which old state someone publishes. Because old states are harmless rather than dangerous, there is no need to store a growing archive of penalty keys, and restoring a node from a stale backup no longer risks losing the whole channel.
What it needs from Bitcoin
Eltoo cannot be deployed on Bitcoin today. It depends on a new signature-hashing mode, SIGHASH_ANYPREVOUT (a proposed soft fork), which lets a pre-signed transaction spend any output whose amount and script match, rather than binding to one specific prior transaction. That flexibility is exactly what allows a single signature to attach to "any matching old state." Eltoo's symmetric design also makes multi-party channels far more tractable than the current asymmetric construction.
Eltoo is closely tied to advanced channel constructions such as the Channel Factory, which benefits from symmetric, multi-party-friendly state updates.
In Simple Terms
Eltoo, also known as LN-Symmetry, is a proposed redesign of how Lightning payment channels enforce their current balance. In today’s channels, security rests on a…