Flashnet Trade is designed to minimize trust while upholding user sovereignty and delivering a fast, secure trading infrastructure. The flow comprises of three core, distinct components: Matching, Execution, and Settlement (via Spark). The arrangement of each is intentionally designed to maximally balance efficiency, security, and user control, as detailed below.

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Execution

Execution in Flashnet Trade is powered by an intent-based execution engine, which is verified by a distributed network of validators. These validators confirm the intent behind trade matches and collaborate to settle trades securely.

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How It Works

  • When a match is triggered by a Flashnet market, funds are temporarily held in a delegated validator wallet. This wallet is jointly controlled by the user and a consortium of validators, ensuring that validators cannot move funds unilaterally.
  • Validators can only sign off on transactions that match the user’s intent. This setup minimizes the time funds are outside the user’s full self-custody, enabling non-interactive, fair, and transparent trade settlement.
  • Both the validators and the settlement process run within a Trusted Execution Environment, which provides cryptographic attestations to verify their legitimacy to external parties.

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Risks and Mitigations

The primary risk arises if a majority of validators are compromised, potentially allowing them to authorize fraudulent transactions. To mitigate this:
  • Users can always exit by:
    • Unilaterally sequencing funds to Layer 1, bypassing the settlement layer entirely.
    • Collaborating with a minority of validators to redirect funds to a new address under their sole control.
As long as a minority of validators remain honest, the user’s funds stay secure.

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Order Matching

Order matching is performed in a tight-knit centralized system to prioritize high-efficiency matching.

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How It Works

  • The matching engine processes orders based on standard price/time priority.
  • The matching engine does not touch funds, it simply matches orders and reports the results to the execution layer.

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Settlement

Spark is a scaling solution that enables instant and free transactions for native BTC and other Bitcoin assets. It implements a custom-statechain like design which allows transactions to be settled off-chain with L1 guarantees, in the same way as the Lightning Network.

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How It Works

Spark operates under a 1/n trust assumption, meaning the system remains secure as long as at least one of the n validation parties is honest. This approach maximizes scalability and concurrency while reducing reliance on centralized trust.

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Further Details

For a comprehensive explanation of Spark’s trust model, refer to the Spark Trust Model documentation.