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Settlement Layer Meaning

A settlement layer is the foundational blockchain where the "Final Truth" of ownership is recorded. In a "Modular" blockchain architecture, different layers handle different tasks (like execution or data availability), but the settlement layer is the "Supreme Court" that provides the ultimate security and resolves any disputes that occur on the faster, higher layers (L2s).The primary function of this layer is Finality.

Once a transaction is recorded on the settlement layer, it is considered irreversible. For example, an Ethereum Rollup might process 10,000 trades per second, but those trades aren't "Final" until a summary (a "Proof") is posted to the Ethereum mainnet.

If there is a disagreement about a trade on the Rollup, the code on the settlement layer has the final say, ensuring that the security of the "Fast" layer is always equal to the security of the "Secure" layer.Bitcoin is often described as the world's most secure settlement layer. While it is too slow for buying coffee directly, it is perfect for settling multi-billion dollar transactions between banks or for anchoring "Layer 2" networks like the Lightning Network.

As the blockchain industry matures, we are seeing a "Layering" of the stack, where the base layer becomes an expensive, slow, but nearly "Unstoppable" ledger of global truth, while daily commerce moves to faster layers built on top of it.

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Important Disclaimer:

Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

Finery Markets’ software is non-custodial and is provided exclusively to licensed institutional entities that act as independent operators of their own environments. All counterparties are solely responsible for establishing and maintaining their own bilateral trading and settlement relationships. Finery Markets is not a party to any such arrangements and assumes no responsibility for the conduct, verification, or compliance obligations of any users of the software.

Nothing on this website shall be construed as a financial promotion, investment advice, or an offer to engage in regulated activities. Access to and use of the software is strictly limited to clients who have entered into a software licensing agreement with Finery Markets. Persons located in jurisdictions where such access is restricted should not rely on this website or any of its contents.

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