Watchtower Network

Definition ∞ A watchtower network is a group of independent, always-online nodes that monitor blockchain activity, particularly for off-chain protocols like payment channels. Their primary function is to detect and broadcast punitive transactions if a counterparty attempts to cheat by publishing an outdated state. Watchtowers ensure that participants in off-chain interactions act honestly by providing a mechanism for dispute resolution and penalty enforcement. They enhance the security and trustlessness of Layer 2 solutions.
Context ∞ News often discusses watchtower networks in relation to the security and scalability of Bitcoin’s Lightning Network and other payment channel implementations. The effectiveness and decentralization of these networks are critical for preventing fraud in off-chain transactions. Research continues on improving watchtower efficiency, reliability, and economic incentives to support wider adoption of Layer 2 payment solutions.