Proof of concept DLC channels
DLC channels combine the ideas of Discreet Log Contracts and bidirectional payment channels (without the Lightning network) on top of Bitcoin Lightning Network. It is one of the first settlement implementation of Debnk protocol.
We believe that DLC channels can be also implemented on top of Elements/Liquid, but probably without confidential transactions. (TODO: Verify)
Discreet log contracts
Discreet log contracts are simple contracts that use on-chain multisig capability. Let's say that Alice and Bob want to enter an (inverse) perpetual swap contract based on the price of Bitcoin in USD. Alice goes long 1000 USD, Bob goes short 1000 USD. They both post some collateral (let's say 0.05 BTC each). The price of Bitcoin is 8000 USD at the time of the opening of the contract. The contract expires and the funds are distributed based on the price of Bitcoin on Friday noon.