State Channels vs Rollups

State channels were the original L2 scaling solution. Open a channel, transact off-chain infinitely, settle on-chain when done. Lightning Network, Raiden, the early dreams. Rollups came later and ate their lunch.

Channels require participants to be online. Miss a challenge period and you can lose funds. Rollups don't have this problem. Submit your transaction and walk away. The UX difference is significant.

Channels need capital lockup per counterparty. Want to transact with 100 people? Lock funds in 100 channels. Rollups pool liquidity. One deposit enables transactions with everyone. Capital efficiency favors rollups.

Routing in channel networks is hard. Finding paths with sufficient liquidity. Rebalancing when channels deplete. The complexity compounds. Rollups just batch everything together.

Channels still have niches though. High frequency interactions between known parties. Gaming sessions, streaming payments, specific use cases. When you know your counterparty and need maximum speed, channels shine.

The lesson is UX wins. Technically elegant solutions lose to simpler ones. Rollups are conceptually straightforward. Users just use them. That simplicity drove adoption.