HTLC stands for Hash Time-Locked Contract. It’s a mechanism used to facilitate secure and trustless transactions between parties without requiring direct trust in one another.HTLCs work by using cryptographic hashes and time-limited conditions. When two parties agree to a transaction, the sender creates a unique hash value and sets a time limit for the contract. The recipient must provide a secret associated with that hash to claim the funds. If the recipient does not reveal the secret within the specified time, the sender can reclaim the funds.This protocol is particularly useful in decentralized exchanges and payment channels, allowing users to exchange assets securely. HTLCs enable atomic swaps, where two parties can exchange different cryptocurrencies directly without relying on a third party. If any part of the swap fails, neither party loses their funds.Overall, HTLCs enhance security and efficiency by providing a structured way to manage conditional transactions, ensuring that both parties fulfill their obligations.