It’s a payment channel. When a channel is opened it is an on chain transaction and when a channel is closed it’s an on chain transaction.
In between those two events the channel is like a bar tab but instead of putting a card on file in tradfi lightning uses multisigs and htlc
I understand that it's payment channels but the going off-chain bit seems like a bad idea to me, it seems like it could open the door for some shenanigans.
The multisig, and hashed time lock contract get very close to zero shenanigans. Only when running a ln node have I run into the hiccups of always have to be online which may result in forced closed channels if your down for long and inbound/outbound liquidity management. If you don’t run a lnnode or use non custodial wallet. Custodial wallets are it’s pretty seamless but trade off is custodial wallet
