Technical Architecture

This page provides an overview of Bolt Liquidity's technical architecture and an in-depth look at how the product works under-the-hood.

Bolt’s architecture is purpose-built for efficient, cross-chain liquidity provision with a strong emphasis on execution quality and capital efficiency. It brings together three primary components — the Price Oracle, Bolt Outposts, and Market Makers (Order Settlers) — each playing a distinct but interconnected role.

Core Components

Price Oracle

The Bolt Price Oracle is the foundation of the protocol.

• It continuously sources market data (liquidity depth, volumes, volatility) from both centralized and decentralized exchanges.

• A network of validators emits Proof of Pricing Efficiency (PoPE), verifying that trades are executed at the best available market rate.

• This mechanism effectively acts as a global quoting engine, ensuring price consistency across all chain-specific Outposts.

Bolt Outposts

Bolt Outposts are chain-specific smart contracts deployed across ecosystems such as Cosmos, Sui, etc.

• They serve as liquidity hubs, exposing Bolt’s pricing and settlement logic directly to users on any supported chain.

• Outposts utilize single-sided, multi-quote liquidity pools — meaning LPs provide one base asset, which can be traded against multiple quote assets.

• This pool structure eliminates impermanent loss and avoids liquidity fragmentation across pairs.

Market Makers (Order Settlers)

Market Makers provide liquidity to Bolt Outposts for swap orders.

• When a swap is initiated, they hedge the trade on external CEXs to remain delta-neutral.

• They rebalance drained pools by returning hedged assets onchain, ensuring liquidity remains aligned.

• Market Makers earn fees from both swaps and liquidity provision, incentivizing active participation in maintaining healthy pools.

Trade & Liquidity Flow

Swap Execution

1. Order Creation – User initiates a token swap on a Bolt Outpost for the quoted price provided by the Oracle

2. Order Execution - The swap is executed on the Outpost smart contract with a valid price; quote tokens are sent to the user, while their base payment token accrues in the liqudity pool contract

3. Hedging – Market Maker executes an offsetting delta-neutral trade on a CEX re-purchasing the base asset at CEX price

4. Rebalance – At a certain threshold the Market Maker will rebalance their LP in the contract by moving tokens from the CEX back onchain as base taking the quote and their fee as payment

Liquidity Lifecycle

1. LP Deposit – LPs deposit base assets into Bolt pools on the Outpost

2. Market Making – Market Makers use these pools to fulfill user swaps and hedge any token risk externally

3. Fee Accrual – Fees are distributed proportionally to LPs and Market Makers via Pool contracts, as swaps are performed Market Makers earn fees which can be withdrawn as quote assets

4. LP Withdrawal – LPs can withdraw their pool liquidity at any time, based on whatever share of the pool they own as base or quote assets

Liquidity Provision

LPs are currently permissioned within Bolt during Alpha release, please contact the team via Contact & Support Channels