I believe it settles on chain periodically with a single balance and a summary of all transactions instead of settling each transaction in turn.
I mean within the LN network itself.
Like if i send 10 sats to you, what determines that it is already spendable
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There is some collateral in the system I think, due to node operators having to put bitcoin into a channel to open it. So I believe there is a reputational aspect also.
Don't take my word for it though, I know less than anybody on NOSTR about anything technical, and I'm generally wrong.
