Atomic swaps are trustless peer-to-peer exchanges of digital assets from one user to the other, without any middleman or intermediary. Atomic swap trading is magnitudes more secure than trading crypto on a centralized exchange, as users never need to give up control over their assets.
Digital Asset Trading Is Still Centralized
Today, trading one digital asset for another is risky, inconvenient, and costly. Here’s what the trading process looks like when using centralized exchanges:
Step 1: Purchase Coins
Purchase coins using a fiat gateway service. These services only offer a few major assets, so acquiring smaller market cap assets is difficult.
Step 2: Send To An Exchange
Send the newly-acquired assets to a centralized exchange and wait for the deposit to be confirmed. This may take several hours.
Step 3: Place An Order
Place trade orders for the desired coins or tokens. A limited variety of trading pairs or a lack of liquidity may make this difficult.
Step 4: Withdraw Funds
Withdraw the funds to a wallet that allows you to control your funds and hold your own private keys. This may also take several hours.
This process is a hassle and makes digital asset trading an overly complicated task.
Atomic Swaps fundamentally improve digital asset trading.
Atomic swaps make trading quicker, cheaper, and easier than ever before. It’s a truly fundamental shift in the way that digital assets are exchanged.
Traders never need to send funds from one address to another to swap assets. Trading occurs within the wallet.
This means traders always maintain control of their private keys, so trading is far more secure.
Atomic Swaps leverage existing technologies to ensure stability.
By leveraging proven technologies, Komodo’s atomic swap framework allows secure and reliable trades directly from one trader’s wallet to another.
Libtorrent, a specific implementation of the BitTorrent Distributed Hash Table (DHT)
Hash & time-locked payments, a feature common to more than 99% of all coins and tokens
Atomic Swaps in 7 Steps
Two nodes negotiate the locktime of payments needed for a trade. This will depend on which two assets are being traded. The nodes also agree upon a secret hash.
The market taker node (i.e. the trader who accepted the trade offer, rather than the trader who made the offer) sends the DEX fee of 1/777 (~0.13%) of the trade’s value. Market makers pay no fees.
The market maker sends the payment, which is locked by the secret hash and timestamp negotiated in Step One, to the market taker. The taker cannot yet access or spend the payment, although they can verify that the maker has sent the funds.
The taker announces that they have received the maker’s payment. If the taker never acknowledges receipt, then the maker will receive a refund of their payment after twice the length of the agreed-upon lock time has elapsed
Now, the taker sends their payment. If the maker has not claimed the funds after the agreed-upon lock time has expired, the funds are refunded to the taker.
The maker spends the taker’s payment by moving the funds to their personal wallet. This transaction is publicly visible on the blockchain
Taker sees that his payment is spent, extracts the secret hash from the withdrawal transaction, and spends the maker’s payment. The funds are then deposited into the taker’s wallet.
Promoting Mass Adoption With AtomicDEX
Komodo’s AtomicDEX application allows peer-to-peer atomic swaps, making trading easier and more accessible than ever.
Traders always control their private keys and their funds while making trades.
AtomicDEX is available for both Android and iOS, enabling mobile P2P swaps.
Unrestricted Trading Pairs
Direct trading pairs exist between any two assets listed on AtomicDEX.
The trader who takes an offer pays 0.13% of the trade's value. Makers pay no fees.
Instant Order Matching
When two traders agree upon a trade, the orders are matched instantaneously.
No Deposits & Withdrawals
Trading occurs within the wallet. No need to make deposits or withdrawals.