Interledger Protocol (ILP)

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Pronunciation

[in-ter-led-jer proh-tuh-kawl]

Analogy

Think of as the postal system for money, where value packets are forwarded through offices (connectors) until they reach the recipient’s mailbox, regardless of the originating or destination networks.

Definition

A suite for sending payments across different ledgers and payment networks by routing packets of value through connector nodes, enabling seamless cross‑ledger transfers without requiring a centralized exchange.

Key Points Intro

defines a packetized, connector‑based architecture to interoperate heterogeneous payment systems.

Key Points

Packetization: Splits transfers into small value packets with conditional receipts.

Connectors: Nodes that forward packets and provide liquidity between ledgers.

Conditional transfers: Uses cryptographic hold-and-release (HTLC-like).

Universal addressing: ILP Addresses route packets across networks.

Example

Alice on an -based payment network sends 10 USD of value to Bob on a : splits it into packets, connectors route and exchange as needed, and Bob receives the full amount in XRP-equivalent value.

Technical Deep Dive

Packet format includes headers (destination , amount, expiration) and a fulfillment condition (hash lock). Connectors maintain balance sheets with peers, quote exchange rates, and forward Prepare, Fulfill, or Reject packets via STREAM transport. Settlements net out via bilateral entries or periodic settlement cycles.

Security Warning

Connector compromise or liquidity exhaustion can cause packet loss or theft; choose well‑capitalized, reputable connectors and monitor packet acknowledgements.

Caveat

Performance depends on connector liquidity and network reliability; micro‑packet overhead can increase .

Related Terms

Ledger

Blockchain & Cryptocurrency Glossary

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