Multi-Currency Wallet and Lightning Swaps — Stakenet Solution
Whilst a lot of blockchain projects are struggling with scalability and trying to prove their decentralization, Stakenet (XSN) is swiftly moving forward in creating interchain capabilities and services that will help in fulfilling its vision of a trustless profit-driven economy. In this article, we will be discussing two important pillars that we are pioneering to provide a highly secure interchain economy for cryptocurrencies and making the world free of centralization.
Stakenet Multi-Currency Wallet
A cryptocurrency wallet is an important and integral component of the cryptocurrency universe. It is a secure digital wallet which helps in storing and transacting digital currencies like Bitcoin and Ethereum. Most of the coins and tokens have their official wallets but with changing times a lot of independent third-party wallets have surfaced providing a variety of features. Here comes the problem; for every cryptocurrency that a user holds, he also requires a wallet to store it, thus making it cumbersome for the holder to have so many wallets.
Stakenet provides a solution to this problem as Stakenet’s Masternode Network will hold databases and run full nodes of multiple blockchains allowing Stakenet to create a wallet that can securely send, receive and confirm a transaction on separate blockchains. These separate blockchains are held in the second layer which communicates with the first layer nodes providing users a single wallet which can house multiple wallets.
With decentralization slowly finding its roots in today’s world, people are showing an inclination towards replacing centralized intermediates with decentralized ones. Although the acceptance of a complete decentralized organization is still distant, there has been the emergence of a lot of services which now help people in carrying out transactions without an intermediate party. Atomic Swaps are one of these. In simple terms, an Atomic Swap is a smart contract technology that enables the exchange of one cryptocurrency for another without using centralized intermediaries, such as an exchange.
In August 2018, we released a new Lightning upgrade along with the implementation of Lightning Network and Atomic Swaps. The combination of Lightning Network along with Atomic Swap allowed the execution of “Lightning Swap” which is an instant and nearly fee-less cross chain trade. The successful execution of Lightning Swap has taken us a step closer to our trustless one-click Lightning Swap solution which provides the user with a unique interoperable peer to peer solution that is only available with Stakenet.
To elaborate, Lightning nodes validate transactions between two separate chains. A Lightning node is an endpoint communicator that should have data from both chains. In other words, it needs to monitor both chains and thus is able to validate the transaction. With the upcoming development of the Multicurrency Wallet, Masternodes will be holding the separate chains in a decentralized manner, so you won’t need to download both chains. The Masternodes will also provide Watchtower services, so if anything goes wrong it will execute automated scripts to claim the punishment rewards.
Crypto exchanges are the mainstay support for the cryptocurrency market as they allow trading of coins thus providing liquidity. Even after being such an important component of the crypto markets, most exchanges are centralized and are operated out of a single central server making them vulnerable to hacking or forced closure by the regulatory authorities. Also, once a user places a trade with a centralized exchange, their coins leave their possession and are stored with the exchange, thus making the user lose the utility and benefits that one receives from the coins. These are some of the potential risks which Stakenet aims to answer with its proposed Stakenet dx (Cross-Chain Lightning Swaps).
With important components such as the Multicurrency wallet and Lightning Swap in place, we are only a few steps away from creating this solution. There are some DEX’s which are currently operating but all of them have some vulnerabilities of centralization, whereas Stakenet would be the first to operate a completely decentralized solution which would be entirely run by Masternodes and not supported by a centralized entity. Apart from that, the other advantages of the Stakenet’s Cross-Chain Lightning Swaps are:
- The coins which the users hold never leaves them unless the transaction is completed giving them unlimited access to their coins.
- With coin in their wallets, they also benefit from all the utilities, features and staking rewards of the coin.
- The user remains anonymous as he doesn’t have to provide any Know Your Customer (KYC) details to anyone providing the user with complete anonymity and freedom to trade fearlessly.
- Not being in hands of central authorities, the Stakenet dx cannot be shut down by anyone, not even Stakenet.
- All transactions are done on a peer to peer basis without the involvement of a central authority, making the transaction more secure and less expensive as the fees are lower.
The question is what’s the point of a native token on a chain that facilitates Lightning Swaps?
There have been two main criticisms of Lightning Network thus far:
By using the XSN native blockchain to host a one-click Lightning Swap solution, it gives the advantage of utilizing its second layer Masternode collateral to solve both of these issues. Masternode collateral can only be achieved by using a native blockchain, since the rules need to be baked into the first layer to have secure Masternode’s in the first place, so you cannot use DApps or off-chain tokens to have the same effect or solve the problems that require a dedicated Masternode network.
With our native blockchain you will be able to take this collateral and allow Masternode owners to make that collateral work for them by generating fees from routing Lightning payments, becoming Watchtowers, holding other chains, providing Light Wallet TX broadcasting services and liquidity for the Lightning Network as a whole. Furthermore, all major infrastructures will be built using Masternodes to provide a decentralized service without hurting normal users on the base protocol.
XSN users and owners will be rewarded accordingly via demands for XSN to set up these Masternodes or using it as a medium of exchange, because it will be one of the most liquid Lightning Networks necessary for high volume trading and general payments.
This is one of the major selling points along with other exciting capabilities our second layer will allow in the future. As new technologies regarding smart contracts, DApps, and scaling come into the scene we will also be able to uniquely solve problems that these technologies might face using the same approach we are taking with Lightning for example.
In short, all services running on the Masternode network will generate fee’s that will be paid in XSN in one way or another. Many users may not even realize they have paid in XSN as it will all be handled by Lightning swaps in the background. For example, if someone wants to trade BTC/LTC then the fee will be initially collected in BTC, however this BTC will be converted into XSN via a Lightning Swap in the background. That XSN will then be distributed back to the MN holders for providing the services.
This will happen for every service that is run on the XSN Masternode network, such as the Privacy features and upcoming DApps. We believe this economic model will provide a constant demand for XSN with fees collected constantly being converted to XSN and then distributed back to Masternode holders.
We have also partnered with professional trader Frank Amato (current Block 5 Capital Co-Founder, Former Executive Director of JP Morgan, Former Managing Director of Bear Stearns), to help design the Stakenet dx, as he provides insights on how the one-click Lightning Swaps can meet the expectations and requirements of seasoned traders. It will have a “Pro-Trader Mode” which will serve ambitious and also seasoned retail fund investors.