November 20, 2019
Today, Boston-based startup Arwen announces a launch of its software on Ethereum mainnet. Arwen is a settlement solution that allows users to trade at a centralized cryptocurrency exchange, without trusting the exchange with custody of its coins. As of today, Arwen can be used to securely settle trades of Bitcoin (BTC), Litecoin (LTC) and Bitcoin Cash (BCH) on centralized Ethereum (ETH) markets with zero counterparty risk. Arwen is currently available to settle trades at KuCoin, a top global exchange.
Centralized cryptocurrency exchanges play a vital role in enabling liquid crypto market. Yet, today, most centralized cryptocurrency exchanges also act as a custodian and settlement agent. Traditional markets don’t intermingle custody with trading, and crypto markets must ultimately evolve in the same direction. KuCoin is the first exchange to support Arwen’s secure settlement technology, a move that cleanly separates trading and custody at the exchange. With Arwen, traders no longer need to trust KuCoin with custody of their coins — they can securely hold coins in their own wallets, even while they trade on KuCoin’s orderbook.
The Arwen team is led by longtime collaborators Sharon Goldberg (CEO) and Ethan Heilman (CTO). Goldberg is also computer science professor and Heilman also computer science PhD, and both have contributed to the design of the Bitcoin and Ethereum protocols. Goldberg said:
“Arwen’s approach is unique, in that it uses each coin’s native blockchain to secure trading. With Arwen, the Ethereum blockchain secures the trading of ether, and the Bitcoin blockchain secures the trading of bitcoin. We make no additional trust assumptions. We don’t introduce pegged side-chains, new tokens, new blockchains, or new trusted oracles. We just use the blockchain itself to secure trading and settlement. There’s no need to trust an exchange — Arwen uses the blockchain to protect your coins, even if the exchange is compromised or unresponsive.”
Today’s announcement presents a major technological leap for the industry, because the Ethereum and Bitcoin protocols are famously incompatible. Arwen can support both Ethereum and Bitcoin because it is uses novel smart contracts that communicate across incompatible blockchains.
Moreover, Arwen is a layer-two blockchain protocol. A layer-two blockchain protocol uses the blockchain as a root of trust, but does not require every computation and action to be executed on the blockchain. This delivers speed and scalability, because the blockchain does not need to confirm every action taken by the protocol. (Blockchain confirmations can be slow! On Bitcoin, it takes 10 minutes on average to confirm a block.) This also delivers security, because the blockchain is backing every action made by the protocol.
This ultimately means that Arwen trades of Ether into Bitcoin, Litecoin, or Bitcoin Cash are fast enough to support trading on KuCoin’s orderbook. Michael Gan, the CEO of KuCoin, said:
“The solution we deliver with Arwen has the potential to bring the security of crypto trading to a whole new level. With the mainnet launch today, you can trade real BTC, ETH, LTC and BCH, not just their pegged counterparts, on KuCoin & Arwen in a decentralized way. Increased security and high liquidity — you now can enjoy both in one place.”
Users must have a KYC-verified KuCoin account in order to trade with Arwen on KuCoin. Arwen on KuCoin is not currently available to residents of the US, mainland China, Cuba, Iran, North Korea, Syria and Crimea.