Settlement

Settlement occurs on a blockchain. The user's Virtual Node will determine if a vault has sufficient liquidity and then request the Final Balance State, FBS, from the counterparty. The FBS executes immediately onchain, bypassing the typical fraud proof delay.

FBS are intended for immediate withdrawal as they lock balance states and expire within five minutes. This prevents double spend as outdated FBS could otherwise immediately withdraw funds without the possibility of dispute. The user can create unlimited FBS after expiration of the last.

If the counterparty refuses to create the FBS, then the user may submit their latest nonfinal balance state as a fraud proof.