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The smart grid is emerging as a future paradigm for power networks. While it has many successful applications, peer-to-peer trading in the local energy market (LEM) is still challenging due to the lack of security and trading mechanisms. In this paper, we design a data-driven, secure, and smart solution <inline-formula> <tex-math notation="LaTeX">$DS^{2}$ </tex-math></inline-formula> to address this problem. We first propose a five-layer design of LEM based on blockchain. We then model peer-to-peer trading in LEM as a cost minimization problem and derive an efficient <italic>online</italic> solution leveraging matrix factorization and integer linear programming. <inline-formula> <tex-math notation="LaTeX">$DS^{2}$ </tex-math></inline-formula> is implemented and evaluated on a private Ethereum blockchain. We show that <inline-formula> <tex-math notation="LaTeX">$DS^{2}$ </tex-math></inline-formula> achieves a mean absolute percentage error (MAPE) of 12.8&#x0025; compared with the <italic>offline optimal</italic> method through extensive simulations on the real-world dataset.