Introduction to Instant Settlement
Following on from yesterday’s blog about gas cost comparison, today we’re looking at an exciting upcoming feature of nahmii: instant settlement. We’ll start with a quick summary of how things work currently, before explaining why instant settlement will be such a cool feature for both users and liquidity providers alike.
How things work today
In order to withdraw your funds from nahmii, you must first go through a process known as ‘settlement’. When making transactions in nahmii, no information is shared with the slower Ethereum mainnet — that’s why nahmii’s performance is so much better than Plasma or other side-chains. Eventually users will need to reconcile their off-chain transactions with the on-chain record, similar to all state-channel solutions. This is where the settlement process comes in.
Today, a key part of nahmii’s settlement process is the ‘challenge period’. Once a settlement is started, other users have five days to ‘challenge’ their request by submitting a receipt as proof of fraud. If no proof is provided at the end of the five days, the settlement can be confirmed and a withdrawal processed.
Five days is quite a long time to wait for a withdrawal; it’s about the same time as it takes for most international SWIFT payments to go through or for a typical fiat withdrawal from a centralised exchange. It is slower than the typical crypto-withdrawal from centralised exchanges though. We have an innovative solution for speeding this process up — instant settlement.
Instant Settlement, Instant Withdrawals
The key to understanding instant settlement is found in nahmii’s transaction receipts. Every transaction within nahmii generates a receipt, which is then made publicly available by the Operator. Using these receipts, it is possible to check that a user’s settlement is valid and ensure that the settlement will not be challenged. This paves the way for instant payouts.
Consider the example of Alice, who wants to settle her nahmii account and withdraw the full balance of 10 ETH. Bob provides ‘instant settlement’ services for a fee. If Bob verifies Alice’s settlement request using her transaction receipts, he might offer to send funds to Alice immediately in return for taking ownership of her settlement request. Bob could offer Alice 9.99 ETH straight away, which would represent a fee of 0.1%. When Alice’s valid settlement request is processed in five days, Bob will receive the full 10 ETH. With instant settlement Alice can receive her funds immediately, while Bob takes a small fee in return for providing a valuable risk-free service: it’s a win-win.
With instant settlement, users can receive their withdrawals from nahmii in a matter of seconds — not days.
The hubii team are currently working hard on delivering trades within nahmii, which is coming very soon. We have big plans for nahmii’s instant settlement feature, which will play a key role in improving the user experience.
In our next blog, we’ll look at another innovative feature based on instant settlements; this patent-pending system will allow users to enjoy premium content and subscription-based services without paying premium subscriptions. Stay tuned for more updates in the next few days.
