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XLM How Stellar Path Payment works
On the Stellar Network, Path Payment allows the sender to initiate a payment using one asset, while the recipient eventually receives a completely different asset-all in a single on-chain operation. Rather than moving assets directly between accounts, the network routes payments through built-in decentralized exchanges (SDEX) and liquidity pools, spanning multiple order books along the way. For example, a payment can be made in the form of XLM and eventually arrive in the form of stablecoins without the need for manual redemption by either party.
Strictly Send vs. Strictly Receive
There are two types of path payments, the difference being which end of the transaction the sender wants to fix. Under the strict sending model, the source asset amount remains the same, while the received amount changes based on the available quotes in the order book. Under the strict receiving model, the target amount is fixed, while the cost paid by the sender changes. Developers can choose the appropriate model based on actual needs.
For path payments to complete successfully, there must be a feasible route through a decentralized exchange or liquidity pool. The network only considers routes up to five hops. If a path cannot be found, the transaction will simply fail and will not be completed at an unfavorable exchange rate. The key is that the entire process is atomic: either fully executed or fully rolled back, protecting both senders and recipients from the risk of partial deals.
