> For the complete documentation index, see [llms.txt](https://docs.lightning.engineering/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.lightning.engineering/the-lightning-network/payment-channels.md).

# Payment Channels

Payment channels are multisignature contracts between peers. Payments are made inside these payment channels and can be settled on the Blockchain.

The Lightning Network is made up of payment channels. Each channel represents an UTXO on the Bitcoin Blockchain and is cooperatively controlled by two peers, who can transact through that channel as frequently as they want.

{% content-ref url="/pages/8S06oYaXfqZpRvXoNxjf" %}
[Lifecycle of a Payment Channel](/the-lightning-network/payment-channels/lifecycle-of-a-payment-channel.md)
{% endcontent-ref %}

{% content-ref url="/pages/-MhrnXFtYrDBUWjTEJxR" %}
[Etymology](/the-lightning-network/payment-channels/etymology.md)
{% endcontent-ref %}


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