Atomic exchange protocol from Swap

About the atomic exchange of cryptocurrency, I first heard in September 2017 from the media. Charlie Lee — the creator of Litecoin, in his Twitter announced the successful execution of the atomic exchange between Litecoin, Bitcoin, Decred and several more cryptocurrencies. Much has been written about these events, but I did not think about the importance of atomic exchange technology for trading in crypto markets.

In April 2018, I heard about atomic transactions again, this time from Alexander Noxon — the developer of the Swap protocol, whom I met at a conference in Moscow. Having learned the nuances of atomic exchange, I was impressed with Swap technology.

The atomic exchange protocol means the exchange of crypto assets of different blockchains (cross-chains) directly from the wallet to the wallet. The complexity of the technology is in the fact, that one blockchain does not confirm transactions in another blockchain. Therefore, there remains the risk of cheating by the participants. The task of the atomic exchange protocol is to guarantee the mutual fulfillment of the exchange conditions. At the same time, Swap excludes the intervention of a third party to the exchange process, because crypto assets are sent directly to the wallets of the transaction parties through the execution of a smart contract. If one of the participants has not fulfilled the conditions of the transaction, then the exchange does not occur, and the crypto assets remain in the hands of the initial owners. There was one question to the technology: how to ensure liquidity of decentralized exchange, so that users can quickly find the counter party for the transaction?

At that time, I was trading in several low liquid markets, as a market-maker by agreement with companies, and, not by hearsay I knew, that there was a lack of liquidity in most crypto markets. Without it, the powerful potential of atomic exchange will remain in low demand. Insufficient counter demand increases the time of the transaction for an indefinite time.

Having learned how Swap transactions work, I still did not fully understanding the practical usefulness of the technology. It is possible that I would not understood, but at the end of the summer, 2018, an account of one of my clients on a popular exchange with a deposit on it was blocked. Clarifying the circumstances and unlocking took 1.5 months and, because most of the deposit consisted of crypto assets, the value of the portfolio fell by ~ 30%. Replenishing the accounts of traditional crypto exchanges, we have to rely on their reliability. One cannot be completely sure that tomorrow this reliability will not collapse.

Later, in early October, when our team worked on the concept of an “over-the-counter liquidity token”, I remembered atomic swaps. By uniting the concepts we found what we were looking for. The idea of ​​the Saturn platform based on the Swap protocol, which we present to the market today, combines security and liquidity.

Our team intends to expand the markets of a developing crypto assets, needed by the community. We are confident, that by gaining access to a decentralized trading platform with an extensive set of trading instruments, also market players will receive additional liquidity. How this will happens is described in detail in our White Paper.


Original article

English discussion thread on BitcoinTalk