Sailfish

Sailfish is an execution layer for high-throughput trading on Cardano. It matches orders off-chain for speed, then settles the resulting balance changes back on-chain in batches verified by the Echo consensus network.

Why an Execution Layer?

On-chain order matching on Cardano is constrained by block times and transaction throughput. For trading to feel instant — sub-second matching, real-time order books — execution must happen off-chain. Sailfish provides this execution environment while settling all results back on Cardano, where on-chain validators independently verify every batch.

Architecture

Early versions of Sailfish used Hydra heads directly as the execution environment. As the system was improved and optimized further — overcoming limitations such as Hydra's unanimity requirement, static participant sets, and the need to close and reopen heads when membership changes — Sailfish evolved into an independent solution. The core ideas remain, but the architecture has been rebuilt to better suit high-throughput trading on Cardano.

Sailfish draws on ideas from several established Layer 2 patterns:

• Snapshot-based state commitments, similar to the model used by Hydra state channels on Cardano. Like Hydra, Sailfish captures off-chain state into signed snapshots that can be verified on-chain. Unlike Hydra's unanimity requirement (where every participant must sign), Sailfish uses threshold signatures through Echo for stronger liveness — the network continues to operate even if some participants go offline.

• Batch settlement, borrowing from the rollup pattern popular on other chains. Rather than settling each trade individually on L1, Sailfish groups many order results into a single batch and commits them in one atomic Cardano transaction. This is conceptually similar to how rollups compress many transactions into a single L1 submission — maximizing throughput while inheriting the security of the base layer.

• An on-chain exit mechanism, serving the same purpose as Hydra's contestation protocol and the escape hatches found in rollup designs. If the off-chain layer becomes unavailable, users can reclaim their funds directly on Cardano through a time-locked self-withdrawal process enforced entirely by on-chain validators.

The result is a purpose-built execution layer that combines the snapshot efficiency of state channels, the batch throughput of rollups, and the self-custodial safety guarantees that Cardano's on-chain validators can enforce.

Unified Liquidity

Many Layer 2 solutions suffer from liquidity fragmentation — assets locked on L2 are unavailable on L1, splitting the available liquidity across layers. Sailfish avoids this problem entirely.

Intents submitted through a Smart Account are compatible with both Layer 1 Pond-to-Pond transactions and Layer 2 Sailfish transactions. Users simply signal their intent to trade, and the intent can be settled via whichever path offers the best execution. This means liquidity is effectively available on both layers simultaneously.

For a DeFi ecosystem like Cardano, where liquidity is relatively low at present, this is especially valuable. Rather than splitting an already limited pool across layers, Sailfish adds execution speed without fragmenting the liquidity that L1 participants depend on.