Example | second layer
Second layer protocols where the funds are locked up for periods of time often use locktime as a method to get everyone involved to co-oporate. This is often done by punishing the bad actor and making them forfeit their funds with complex use of locktime contracts.
Example | escrow
Locktime can be used to put money in escrow, or on hold, until a given time. This way the coins cannot be used or moved until a provable, agreed upon time, or they can be released if a pending multi-sig contract isn't fulfilled within their given time. One example of this could be a trustless exchange between multiple people, where if either side fails to fulfill their side of the deal, the respective funds are returned to eah party.
* All terms and definitions may change as the Cryptionary improves