# Order Matching In a decentralized system like Yamata, orders can be processed both **off-chain** (via a sequencer) and **on-chain** (directly recorded on the blockchain). The role of the **Validating Nodes (VNs)** is to ensure that all transactions are processed fairly and consistently across these two parallel paths. The process of matching and verifying transactions involves several potential scenarios, which we’ll break down below.

## **Matching Off-Chain and On-Chain Orders** In all cases, an order will be processed by the **off-chain sequencer (Submission A)** and will also appear **on-chain (Submission B)**. The VNs are responsible for ensuring that these two versions of the transaction match. However, because there is no **globally coordinated time** between off-chain and on-chain transactions, we cannot rely on on-chain ordering for verification. **Instead:** ### **Off-Chain Sequencer (*****Submission A*****)** Handles the orders based on when they arrive at the API. It maintains the order of transactions as they are received and processes them accordingly. ### **On-Chain Orders (*****Submission B*****)** Ensures that the transactions are **included** on the blockchain, but it cannot guarantee the same ordering as the off-chain sequencer. On-chain ordering can be influenced by gas fees and miner decisions, making it less reliable for verifying the exact sequence. **How it Works:** 1. The **sequencer** is the authoritative source for order sequencing. The VNs verify that the **on-chain orders match the off-chain orders**, but they do not compare the exact order between the two systems since the blockchain does not offer an objective time ordering. 2. If there is a mismatch in the **content** (not the order) of the transaction between the sequencer and on-chain, the VNs can raise a **challenge** to investigate further. *** ## **Off-Chain Discrepancies** In this scenario, we are not dealing with on-chain orders, but rather a discrepancy in how the sequencer itself has processed two or more off-chain orders. For example, two orders may arrive off-chain in a particular sequence, but the sequencer may process them out of order. **Example**: * **Order A**: Sell **1 BTC** for **1 ETH**. * **Order B**: Sell **1 ETH** for **1 BTC**. * **Order C**: Sell **1 ETH** for **1 BTC**. Order A could match either Order B or Order C, and the correct match depends on which order, B or C, arrived first at the sequencer. If **Order B** arrived first at the API, it should be processed before Order C. However, if the sequencer mistakenly processes **Order C first**, this is a discrepancy that the VNs must address. **How it Works:** 1. The VNs monitor the **off-chain sequencing** of transactions. If they detect that the sequencer processed orders out of their correct order (e.g., processed **Order C** before **Order B** when **B** arrived first), they can raise a **challenge**. 2. The challenge process ensures that the sequencer cannot manipulate the order of transactions and that everything is processed fairly based on the time of arrival at the API. *** ## **Ensuring No Exclusion of Orders** Another role of the **on-chain mechanism** is to ensure that no valid orders are excluded by the sequencer. While the **sequencer** is trusted to process orders efficiently off-chain, the **on-chain mechanism** acts as a safeguard to make sure that no orders are left out of the system entirely. Even if the **order of transactions** on-chain doesn’t match the sequencer’s order, as long as all orders are **included**, the system remains fair. **How it Works:** 1. The primary goal of the on-chain system is to make sure that no order is excluded. If the sequencer fails to post an order on-chain, the VNs will detect this and raise a challenge. 2. This process ensures that the sequencer cannot simply ignore or exclude orders, while it is in control of the off-chain order processing. *** ## **Cycle of Validation** As long as the orders from the sequencer and on-chain match, the VNs continue to validate each **epoch** in a circular fashion, simply ensuring that everything is correct and moving on to the next batch.

However, when the VNs detect a discrepancy, whether in the order, content, or exclusion of transactions, they immediately move into the [**challenge process**](https://docs.yamata.io/yamata-nodes/order-validation/challenge-process) to investigate and resolve the issue.