L1 Settlement

Core Primitives

• UTXO Model — Every coin is an unspent output; ownership proven via signatures.

• Multi‑Signature — Native Bitcoin script (e.g., 2‑of‑2) requiring multiple parties to authorise spending.

• PSBT (Partially Signed Bitcoin Transaction) — Standard format for safely exchanging signatures before broadcast.

Settlement Workflow

1. Intent → PSBT Build Nexus Engine selects UTXOs from Maker & Taker, constructs draft PSBT.

2. Maker Signature Maker (via Nexus Node) signs its input(s).

3. Taker Signature Taker reviews outputs (price, fee, slippage) then signs.

4. Broadcast Signed PSBT is finalised and sent to Bitcoin mempool.

5. Confirmation Once mined, swap is irrevocable; Nexus marks UTXOs as spent.

Multi‑Sig & Channels

• 2‑of‑2 Channels accelerate repeated swaps: funds locked in a shared output, reducing block wait.

• HTLC Failsafe ensures users can unilaterally reclaim funds if counter‑party is offline.

Key Takeaway: DotSwap leverages Bitcoin’s native primitives to deliver DEX functionality without adding new trust assumptions.