Flashnet Trade enables native Bitcoin trading by merging an off-chain, intent-based matching engine with native L1 settlement via Spark. This hybrid approach delivers instant order matching and secure, non-custodial guarantees. Users can sequence their balance at any moment back to L1, without any permission.

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Trading process

Flashnet Trade is powered by a high performance CLOB for hyper-efficient liquidity provision and off-chain order matching. Flashnet’s distributed validator network ensures the matching engine fairness and execution, whilst Spark’s validator network ensures the trade finality and settlement. 1. Delegated Trading Wallet Creation To trade, a user first collaborates with validators to establish a threshold wallet via a shared key generation process.
  • Control is split: the user and validators each hold a shard of the wallet, and a predefined threshold of shards must sign to authorize actions.
  • The user designates a unilateral exit address, enabling fund recovery via this L1 address as an escape hatch. Validators only sign on valid user intents, with their logic executed in a Trusted Execution Environment (TEE).
2. Placing an Order
  • Let’s say the user wants to make a limit order to buy 1 BTC for 100,000 USD. First, they approve 100,000 USD from their self-custody wallet to the trading wallet. Then, they create a signed order intent, including cryptographic proof of fund approval, and submit it to the off-chain CLOB.
  • Orders can be canceled by revoking approval before matching, requiring no external interaction and atomically cancelling the order.
3. Matching Orders
  • The CLOB verifies the wallet’s fund approval and the intent’s signature. If valid, it attempts to match the order—e.g., pairing a buy at 100,000 USD per BTC with a sell at the same price or better.
  • Upon matching, it generates a proof of match, bundling both parties’ signed intents and trade details. If not matched, depending on the order type, the order will either sit in the order book until matched or be canceled.
  • Funds remain in the user’s self-custody wallet until the order is matched.
4. Settling Trades
  • The proof of match goes to the validators, who independently verify it. Once confirmed, they collectively sign the match details and wallet instructions using the threshold signature scheme, triggering an atomic swap via Spark where the funds are settled.
  • Partial fills are settled proportionally, leaving remaining funds available.

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Behind the design

This system intentionally divorces the matching and settlement processes and validation into two dinstinct layers for performance and security. Off-chain intent-based matching ensures fast order processing and execution without any consensus latency. The threshold signature model eliminates single points of failure for settlement validation, as no individual validator or party can unilaterally control the funds except for the user. The unilateral exit provide true sovereignty to the user at all times, and atomic swaps remove counterparty risk. Together, these features enable Flashnet to deliver the fastest and most secure native Bitcoin trading experience possible.