Financial operations on @Dusk Foundation are not viewed as a chain of unrelated actions. There are no distinct phases of execution, compliance and settlement, which are connected by external systems and assumptions. They are intended to be a single continuous flow of protocols that are regulated by the same rules, guarantees and confidentiality model at both ends.
This stream is at the core of @Dusk in the approach to regulated assets.
A transaction that is made on Dusk automatically enters into a confidential execution environment. The smart contract logic, transaction inputs and sensitive transitions to the state are not available to the non-private network. There is still the ability of a verifier of correctness, but there is no visibility requirement. The protocol differentiates what ought to be proven and what ought to be revealed to make the execution enforceable and confidential.
As part of the same flow of execution, compliance is checked. After the fact or off-chain delegation of regulatory conditions is not checked. Transaction validity itself contains rules of eligibility, restrictions on transfers, and jurisdictional restrictions. In case these requirements are not met, the transaction is not made. No middle ground where the execution is viewed as legitimate but that will be found non-compliant in the future. There is no compliance on Dusk, it is a matter of decision.
The peculiarity of such an approach is that compliance does not disrupt confidentiality. The implementation of rules does not presuppose the openness of sensitive information. The protocol does not have to broadcast financial information to all the participants. This enables the enforcement of regulated logic without jeopardizing privacy expectations on which institutions rely on.
The same is the case with settlement. Settlement is a discontinuity in assumption on most systems. The implementation can be somewhat secured, though the ultimate ownership transference can be made openly, returning exposure at the most opportune moment. At settlement, Dusk does not alternate execution modes. The same and confidential rules of execution, as to ownership transfers, state finality, and asset movement. The part of settlement is not a different section; rather, it is an extension of the execution.
Such continuity is important to regulated assets since settlement is where both legal and financial implications are completed. The exposure to the public at this level may cause regulatory risk, leakage of competitors, and complexity of operation. Maintaining settlement in the same flow of the protocol, Dusk has ensured that the confidentiality and enforceability can be maintained using finality.
There is also selective disclosure incorporated in this single design. Dusk does not presuppose the need to have the complete visibility of all participants. Rather, disclosure is relative. As a conditioned access, the authorized parties like regulators or auditors may have access without transforming the private execution to being transnational to the public. This reflects the functionality of regulated financial infrastructure that is off-chain and has controlled access based on roles instead of being general.
Infrastructure wise, this type of single flow minimizes fragmentation. The assets do not need to pass through any assets between private issuance systems, compliance engines, and the public settlement networks. Every change of systems makes it more risky and complex. Dusk does not incur such hand-offs by locating execution, compliance and settlement in different coherent protocol contexts.
To the developers, this design eliminates structural constraint. Existing financial processes can be modeled in applications without being restructured to reflect transparency-based assumptions. The protocol itself awareness of the confidential implementation, compliance, and protocol settlement behavior. Constructors do not have to replicate these guarantees in the upper level or use external services to maintain them.
Predictability is of benefit to the institutions. A system with consistent behavior of transactions at all levels can be aligned to the risk models, legal evaluation and operational procedures. Hypocrisy There are no secret turnovers in which secrecy is lost or adherence is a choice. The protocol guarantees the same assurances throughout the period between the creation of the transaction and the finality.
The architecture of Dusk is very clear: controlled finance is not a set of steps that are hardly related. It is an enforceable process that is regulated. Dusk allows regulated assets to run on-chain without the risk of breaking privacy, enforceability or institutional expectations by implementing a single flow of confidential protocols between execution, compliance and settlement.
This is not a secondary feature that has been added to a model. It is the behavioral basis of the network. In Dusk, there is no movement of transactions between execution assumptions. They take one route, one set of rules, to the end of it.
