Flashnet recently announced a successful $4.5 million seed round, led by Abstract Ventures with participation from UTXO Management and other investors. This funding will further support the development of Flashnet, a Bitcoin native DEX built on Spark, a layer 2 solution designed in collaboration with LightSpark. The primary goal of Flashnet is to provide users with a decentralized exchange experience that rivals the performance of centralized exchanges without compromising on custody.
Spark, the technology behind Flashnet, allows for instant and unlimited self-custodial transactions of Bitcoin and tokens while also enabling Lightning network transactions. It is open-source and secured by Bitcoin, addressing scalability challenges for self-custody wallets and supporting the use of stablecoins on the Bitcoin network. This innovative approach aims to complement the Lightning Network rather than replace it, creating new opportunities for scaling and enhancing the utility of Bitcoin Finance (BTCfi).
The key question surrounding Flashnet is whether it truly qualifies as a decentralized exchange. According to available documentation, Flashnet operates by utilizing an MPC (Multi-Party Computation) wallet where users, the exchange, and a group of validators act as signers for orders. Funds in the MPC wallet are not claimed until a match is found, similar to how Ethereum approvals work. Market makers and high-volume traders have the option to keep funds in the MPC wallet to streamline the order process, although this does require an additional level of trust.
Trades on Flashnet are settled instantly and atomically on Spark through its native atomic swap mechanism. Trust is briefly required during the matching and settlement process, lasting only milliseconds. Users also have the ability to unilaterally exit the MPC using Spark’s unilateral exit feature, enhancing security measures. RFQ offers are available for wallets, mining pools, and platforms, allowing users to request quotes from market makers for seamless BTCToken swaps.
This development not only complements the Lightning Network but also contributes to the broader adoption and utility of Bitcoin. The increased investment in Lightning-adjacent technologies signifies a positive outlook for Bitcoin’s future, showcasing the ongoing innovation and growth within the ecosystem.
It’s important to note that the opinions expressed in this article are solely those of the author and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine. The author may discuss topics or companies affiliated with their firm, UTXO Management, but does not receive financial compensation for these opinions. Readers should conduct their own research before making financial decisions and consider this content as informational rather than financial advice.