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Optimistic Settlement

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Last updated 12 months ago

Optimistic Settlement is a blockchain mechanism that speeds up transactions and reduces costs by settling transactions off-chain but posting the transaction data on-chain. In other words, instead of verifying every transaction immediately, the system processes them quickly and only verifies if someone challenges their validity.

For Mach, the term "optimistic" refers to the smart contract processing a proposed match before the transaction has been fully settled on both chains. This approach allows for efficient processing by assuming the validity of matches initially. Additionally, no risk is taken on by the user and these transactions are ensured by both Mach and the Market Makers.

In the event of a bad match, users or third parties have the ability to challenge the match to recover their funds. This challenge mechanism is powered by LayerZero, which will automatically freeze funds and sends messages to check if there are issues on either chain. You can read about this process in more detail

here.
Figure X: Transaction Challenged and Released