I don't want hyperliquid people to lose in the long term, so I'm going to explain what @Lighter_xyz actually enables. "Ok it uses ZK proofs so what?" When we hear "ZK proofs" we should question: What is actually being proved? Please bear with me. 👇 Standard ZK-Rollups/Validiums usually prove only the settlement. EG: >> Alice had 10 ETH, Bob had 0. Alice sent 1 ETH to Bob. Now Alice has 9, Bob has 1. The signatures are valid. << That's it. They DON'T prove what happened during the exchange. --> How the trade happened? --> Did the exchange match Alice with the best price? --> Did they let a bot jump in front of her? --> Did protocol counter traded her? You have to trust the exchange's matching engine for this, which almost always runs off-chain like a black box. However Lighter's ZK Circuit is designed to prove entire execution logic. Circuit proves that the matching engine followed the exact rules of the order book. Proof says: --> Alice's buy order arrived at xx:xx. --> The best sell order was Bob's at $000. -->The engine matched them correctly. --> No other order existed that could have given Alice a better price. If the Lighter sequencer tries to skip your order or give you a bad price, it becomes mathematically impossible to generate the proof. On the other side: - Hyperliquid's 24 validators have absolute power over the protocol. EG: >> They literally forced a market rollback on the JELLY pair to save the insurance fund (I find it as a wise move btw). That is how "trusted setup" works. - Because Hyperliquid is on its own chain, there is no "higher court" to appeal. If the Hyperliquid validators agree to censor a user or halt the chain, the user cannot escape to Ethereum because the assets are locked on the Hyperliquid chain itself, or the bridge which operated by same stack. Lighter's "single sequencer" cannot steal funds or fake trades because Ethereum L1 verifies the ZK proof. I liked this court explanation so i am gonna stick with it. Ethereum doesn't run the exchange nor exchange is running on the Ethereum. It just acts as the Supreme Court Judge. - Lighter executes thousands of trades (or cancelletion) off-chain, on their own fast servers, to give you instant speed. This is similar to other exchanges. - Lighter's servers run this ZK math - circuit that basically summarizes all those trades into a tiny cryptographic receipt, the ZK proof. Let's call it just proof. - Lighter sends this proof to a smart contract on Ethereum. - This contract has a specific function which runs a mathematical check. - It just can passes or fails. It's bianary, no abstain outcome or other outcome can come. Pure math. 2+2=4, yes or no? - If the proof is valid, which is the happy scenario, Ethereum updates the balances which are written on the smart contract. EG: >> Tervelix has 1234 $ABC - If the proof is invalid (e.g., the sequencer tried to cheat you), which is the sad scenario, Ethereum rejects the transaction entirely. - The Ethereum smart contract calculates 2+2=5 -> FALSE. The transaction is rejected entirely. The state of the exchange on Ethereum does not update. The hacker/sequencer cannot move the funds because the judge refused to sign off on the new balance. The chain effectively halts rather than accepting a lie. What if the sequencer just stops processing your withdrawal or shuts down the website? - Since the Lighter smart contracts live on Ethereum L1, you don't need the Lighter website.ü - You can call a function directly on the Ethereum contract (Force Withdrawal). - If the sequencer ignores this request for a set time (e.g., 24 hours), the contract enters "Exodus Mode." - This allows users to withdraw their funds directly from the Ethereum bridge contract using the proof, which you can generate yourself because the data is public, directly on Ethereum, not any other DA layer. You don't trust the Lighter team to be honest. You trust the code, which you can read, and Ethereum, which is the worlds most secure network. Feel free to verify on @l2beat
