State channels are a technology used in blockchain networks to enable fast and low-cost transactions between participants. They allow users to conduct multiple transactions off the main blockchain, only settling the final result on-chain. This reduces congestion and fees, making it more efficient for frequent interactions. In a state channel, two or more parties create a private channel where they can exchange information and value directly. Once they agree on the final outcome, they submit this result to the main blockchain, ensuring that the transaction is secure and verifiable. This approach is often associated with projects like Ethereum and Lightning Network.