Ellipsis Labs has launched the private testnet for Atlas, a blockchain aiming to combine the high performance required by financial institutions with the transparency and security offered by DeFi.

Atlas is optimized for financial applications that require low transaction costs, high availability, fast pre-confirmations and frequent oracle updates, prerequisites for what the team calls “verifiable finance.”

The platform is expected to attract use cases like spot and programmable orderbooks, margin trading, orderbook-based lending and efficient credit markets, building upon the team’s experience as developers of the Phoenix DEX on Solana.

Phoenix, an orderbook-based spot exchange on Solana, has processed over $50 billion in unincentivized trading volume — meaning no points, no token.

The new chain takes the Solana Virtual Machine as an execution layer, but settles to Ethereum mainnet. This design choice is the result of the team’s deep experience as DeFi application developers, according to Ellipsis Labs CEO Eugene Chen.

“Atlas is the infrastructure that we wish we had to build Phoenix on top of, and probably where future versions of Phoenix will live,” Chen told Blockworks.

Read more: Solana DEX aims to move price discovery onchain

By using a custom implementation of the Solana Virtual Machine (SVM), Atlas is compatible with existing Solana programs, while settling on Ethereum. This hybrid approach allows Atlas to benefit from Ethereum’s security and large asset base, while still maintaining Solana’s execution efficiency.

“We don’t really care about these purity tests of Solana vs. Ethereum, we basically will want to use the best tool for the job,” Chen said. “We don’t need to build our own settlement layer

because Ethereum exists and it’s doing quite a good job at that.”

This approach mirrors efforts by Eclipse, another project working to integrate the SVM into Ethereum’s ecosystem by building a rollup.

While Eclipse and Atlas share the same goal of making Solana-based applications compatible with Ethereum, Atlas “started from scratch on modularizing or decoupling pieces of the native Solana client,” Chen said, adding that attracting existing Solana dapps is not the goal.

“We are not that interested in having tons of copy/paste applications from Solana, in the same way that I don’t think it makes a ton of sense for Ethereum layer-2s to have a ton of copy/paste applications from Ethereum,” he said.

A key innovation was re-engineering the SVM to make it play nice with Ethereum, where Atlas will post state differences, Chen explained.

“We’ve re-engineered the memory system of the SVM to ensure efficient state root Merklization,” he said, noting this allows Atlas to maintain consistency with Ethereum’s mainnet while offering fast transaction speeds and opening the door for advanced use cases like parallel zk-proving.

Ellipsis Labs hopes its work on the SVM — based on Agave, the validator client from Anza, formerly known as Solana Labs validator client — will benefit the Solana community as well.

“We understand [Solana’s] shortcomings specifically around the developer experience [and] those are some areas where we’re really eager to contribute back upstream to the Solana world,” Chen said.

Atlas’ modular architecture will “almost certainly” use an external data availability layer — still to be determined — which technically makes the layer-2 a validium.

Although Chen dislikes the “modular vs. monolithic” narrative debate, the modular architecture was a deliberate effort to ensure the freedom to optimize all parts of the tech stack.

“Instead of trying to be necessarily as neutral as possible, we’re actually being very opinionated in the design to be as good as possible for specific types of financial applications,” he said.

In addition to performance improvements, Chen points to its oracle system as a key differentiator. Oracles are essential for margin trading and other financial services that rely on timely market data.

“It’s a very simple idea; we’re just going to guarantee that as fast as the oracle can spit out price updates, we’re going to include them on the chain for de minimus cost,” he said.

The current testnet is only available to developers by application, according to a blog post announcing the project. Looking forward, Atlas is on track to release a public testnet by the end of 2024, with a full mainnet launch expected by mid-2025. The platform will also need to undergo multiple audits before the mainnet launch.

The team is focusing on gradually scaling, while maintaining its core commitment to performance, transparency and security, Chen said.

“There’s still a lot left for us to build, but we’re not going to make any false claims,” he added.