Recently, Flashnet declared that it had secured a $4.5m seed funding round, spearheaded by Abstract Ventures with involvement from UTXO Management and others.
Flashnet serves as a Bitcoin native DEX built upon Spark (a Bitcoin L2 created collaboratively by the Flashnet team and LightSpark). It aims to compete with the efficiency of a (Centralized Exchange) CEX without the need for custody.
Spark permits immediate and boundless self-custodial transactions of Bitcoin and tokens, while also allowing users to send and receive natively via Lightning. The platform is open-source and backed by Bitcoin. Spark was developed to tackle the lingering challenges within Bitcoin and Lightning, honing in on scaling self-custody wallets and enabling stablecoins on Bitcoin.
I’m personally an advocate for the latest L2 proposals such as Ark or Spark which seek to enhance LN rather than replace it. The emergence of this expanding scaling ecosystem broadens the design possibilities for something exceptional — rendering Uniswap outdated and transferring all fees to Bitcoin. This underscores my fervent belief in the significance of Bitcoin Finance (BTCfi) for Bitcoin.
Nonetheless, the inquiry persists, are we truly discussing a “Decentralized” exchange here?
Based on the provided documentation, here’s the operational mechanism of Flashnet:
- When a user submits a limit or market order, they direct funds to an MPC (Multi-Party Computation) wallet, where the user, the exchange, and a group of validators serve as signers. Funds within the MPC wallet remain unclaimed until a match occurs, analogous to how approvals function in Ethereum. For market makers and high-volume participants, there’s an option to retain funds in the MPC wallet to eliminate the necessity for a Spark transaction for every order, in which scenario they assume the role of validators, requiring slightly more trust.
- The MPC wallet acquires signed maker/taker orders to finalize trades and initiate fund distributions. All validators must concur on the user’s intention to correspond with the counterparty order, guaranteeing that a limit order for 100 BTC is valid solely if the counterparty order aligns with or surpasses 100 BTC. This intent is established through the user-signed orders submitted at order initiation.
- All trades are executed instantaneously and atomically on Spark utilizing its inherent atomic swap technology. Trust is necessitated only during the fleeting period between matching and settlement, which spans only a few milliseconds. Furthermore, users can exit the MPC unilaterally at any moment employing Spark’s unilateral exit capability, providing an additional security layer. RFQ offers are also accessible for wallets, mining pools, and platforms, allowing users to solicit quotes from market makers for effortless BTC Token exchanges.
This advancement not only augments Lightning but also propels Bitcoin’s ecosystem towards wider adoption and utility, demonstrating why the renewed investment interest in Lightning-adjacent technologies is an encouraging indicator for Bitcoin’s future.
This article represents a Take. The opinions expressed are strictly the author’s own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Guillaume’s writings may particularly cover topics or firms that pertain to his firm’s investment profile (UTXO Management). The perspectives expressed are solely his own and do not reflect the views of his employer or its affiliates. He is not receiving any financial remuneration for these Takes. Readers should not interpret this content as financial guidance or an endorsement of any specific company or investment. Always perform your own research before making financial choices.