Recently, Flashnet announced that it had raised a $4.5m seed round, led by Abstract Ventures with participation from UTXO Management and others.
Flashnet is a Bitcoin native DEX based on Spark (a Bitcoin L2 designed between the Flashnet team and LightSpark). It’s designed to rival the performance of a (Centralized Exchange) CEX with none of the custody.
Spark enables instant and unlimited self-custodial transactions of Bitcoin and tokens while also enabling users to send and receive natively via Lightning. It’s open-sourced and secured by Bitcoin. Spark was built to address Bitcoin and Lightning’s remaining challenges, focusing on scaling self-custody wallets and enabling stablecoins on Bitcoin.
I’m personally a fan of recent L2 proposals like Ark or Spark trying to complement LN instead of trying to replace it. Having this burgeoning scaling ecosystem opens up the design space for something great — obsoleting Uniswap and bringing all the fees to Bitcoin. This is why I’m so adamant about the utility of Bitcoin Finance (BTCfi) for Bitcoin.
Of course, the question remains, are we really talking about a “Decentralized” exchange here?
From the documentation available, here’s how Flashnet would work:
- When a user places a limit or market order, they send funds to an MPC (Multi-Party Computation) wallet, where the user, the exchange, and a set of validators act as signers. Funds in the MPC wallet are not claimed until a match is made, similar to how approvals work in Ethereum. For market makers and high-volume actors, there’s an option to keep funds in the MPC wallet to avoid the need for a Spark transaction for each order, in which case they become validators, incurring a bit more trust.
- The MPC wallet receives signed maker/taker orders to settle trades and initiate fund dispersals. All validators must agree on the user’s intent to match with the counterparty order, ensuring that a limit order for 100 BTC is only valid if the counterparty order matches or exceeds 100 BTC. This intent is known because of the user-signed orders submitted at order placement.
- All trades are settled instantly and atomically on Spark through its native atomic swap mechanism. Trust is only required during the brief interval between matching and settlement, which lasts only a few milliseconds. Additionally, users can unilaterally exit the MPC at any time using Spark’s unilateral exit feature, providing an extra layer of security.RFQ offers are also available for wallets, mining pools, and platforms, enabling users to request quotes from market makers for seamless BTCToken swaps.
This development not only complements Lightning but also pushes Bitcoin’s ecosystem towards greater adoption and utility, showcasing why the resurgence of investment in Lightning-adjacent technologies is a positive sign for Bitcoin’s future.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Guillaume’s articles in particular may discuss topics or companies that are part of his firm’s investment portfolio (UTXO Management). The views expressed are solely his own and do not represent the opinions of his employer or its affiliates. He’s receiving no financial compensation for these Takes. Readers should not consider this content as financial advice or an endorsement of any particular company or investment. Always do your own research before making financial decisions.