How does corda verification work for transactions between multiple states?

Question

I'm currently tying to make a CordApp That will be used for DVP, but I'm having trouble understanding some key concepts. For instance, I understand that Contracts apply to one type of state in particular. What I don't really get is if the contract validation logic should apply to only that state object or all the states that will be in the given transaction. The typical example would be the issuance of a sell order : The input of a transaction the state of the stock account of the issuer and the outputs are the sell Order and the modified stock account. Basically my question is were do I do checks like : I don't sell more than I own, the sum of the number of stocks in the sell order and what is left in the account is equal to what was initially in the account, ... ?

I have followed the Corda tutorials but I'm still not clear on that logic.

Answer 1

It boils down to the Orchestration Layer (flows or APIs, what the user intends to do) vs the Ledger layer (what the user can do. IE - guaranteed shared logic).

Contract code absolutely must be adhered to, so in your case not being able to sell more than you own would be part of the explicit contract.

The CMN guide here helped me conceptualise.

Flows are better described as business logic, so anything can be achieved within a flow as long as it adheres to the contract.

A security consideration: Anybody may create a flow, and they are equally able to use any Asset (and thus it's state) within their third-party flow. It is the relevant contract that ensures that your asset is used for the purpose you imagine, and that it isn't used malevolently.