Channel Lifecycle

What is a Private Channel?

A private channel is an off-chain payment network anchored to Solana. Users deposit SPL tokens into an on-chain escrow program, then transact off-chain through a gateway at high speed and zero per-transfer cost. Settlement back to Solana Mainnet happens via a Sparse Merkle Tree proof, ensuring funds are always redeemable and double-spend is impossible.

Unlike Solana's native payment flow, transfers within a channel do not appear on-chain until a user withdraws. The channel network runs its own transaction pipeline (dedup -> sig verify -> sequencer -> executor -> settler) that processes transactions independently of Solana's block time.

Participants

Instance Admin

The admin deploys the Instance PDA via CreateInstance and controls which SPL token mints are accepted (AllowMint / BlockMint). The admin provisions and revokes operators via AddOperator / RemoveOperator, and can transfer admin rights via SetNewAdmin. There is one admin per instance. Admin rights transfer is irreversible in a single step: the current admin cannot reclaim the role without the new admin's cooperation.

Operators

Operators are provisioned by the admin. They hold an Operator PDA and are the only accounts permitted to call ReleaseFunds (to settle withdrawals to Mainnet) and ResetSmtRoot (to rotate the Sparse Merkle Tree). Operators bypass all ownership checks in the gateway and have access to all JSON-RPC methods including getBlock, getTransaction, and simulateTransaction. JWT role: "operator". Operators must be provisioned directly in the database; there is no self-service escalation. See the Operators guide for deployment and configuration details.

Users

Users self-register through the Auth Service. JWT role: "user". Users can call Deposit directly on the Escrow Program and initiate withdrawals via the channel-side WithdrawFunds instruction on the Withdraw Program. Gateway access is gated to their own verified wallets; they cannot call getBlock, getTransaction, or simulateTransaction.

Channel Lifecycle

1. Instance creation - Admin calls CreateInstance, creating the Instance PDA and configuring allowed mints.
2. Deposit - Users deposit SPL tokens into the escrow via the Deposit instruction. Tokens move to the instance's associated token account.
3. Off-chain transfers - Users send transfers through the gateway. Transfers are sequenced and executed on the channel network without touching Mainnet.
4. Withdrawal initiation - A user calls WithdrawFunds on the Withdraw Program (channel side) to burn their balance and signal a withdrawal.
5. Mainnet settlement - An operator provides a valid SMT exclusion proof and calls ReleaseFunds on the Escrow Program (Mainnet), releasing tokens to the user's wallet.
6. Tree rotation - When the SMT approaches capacity (65,536 leaves), the operator calls ResetSmtRoot to rotate the tree and start a new epoch.

Transfer

Withdrawal

When to Use Private Channels

Use private channels when your application needs:

• Off-chain throughput - your transfer volume would saturate Solana TPS or you need sub-second confirmation
• Privacy - counterparty identities and transfer amounts must not appear on-chain
• Zero per-transfer fees - transferring frequently where per-transaction SOL cost is prohibitive

Use native SPL transfers instead when:

• On-chain composability is required (DeFi, swaps, lending; other programs must be able to observe or act on the transfer)
• Single-transfer settlement is fine and privacy is not a concern
• No gateway infrastructure is available or operationally feasible