Atomic swaps¶

Background¶

There is a considerable demand for exchanging coins
This is mostly done on cryptocurrency exchanges
An exchange is a honeypot and hacks are common
Some exchanges are now decentralised

In a truly decentralised exchange the exchange should not hold any user funds: The transaction should be solely between users

The atomic swap is an important concept

Atomic swaps need timeout mechanisms to replace trust

timeouts¶

A timeout on a transaction implies that it can not be transmitted before the time limit A timeout on a UTXO implies that it can not be spent before the time limit

CLTV is OP_CHECKLOCKTIMEVERIFY

See Handout and Example for more detail Examples ——–

Example of use (from here)

Using OP_CHECKLOCKTIMEVERIFY it is possible to make funds provably unspendable until a certain point in the future.

scriptPubKey: <expiry time> OP_CHECKLOCKTIMEVERIFY OP_DROP
              OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY
              OP_CHECKSIG

scriptSig: <sig> <pubKey>

Handout¶

There are several timeout features in the Bitcoin protocol, implemented as operators in Bitcoin’s scrypt language.

Here we will consider OP_CHECKLOCKTIMEVERIFY, implemented as BIP: 65.

This description of OP_CHECKLOCKTIMEVERIFY, or CLTV is taken mostly from the Bitcoin wiki and the initial CLTV proposal as an improvement to the Bitcoin protocol BIP: 65.

CLTV marks a transaction as invalid if the top stack item is greater than the transaction’s nLockTime field, otherwise script evaluation continues as though an OP_NOP was executed. Transaction is also invalid if

the stack is empty; or
the top stack item is negative; or
the top stack item is greater than or equal to 500000000 while the transaction’s nLockTime field is less than 500000000, or vice versa; or
the input’s nSequence field is equal to 0xffffffff. The precise semantics are described in BIP 0065.

an atomic swap algorithm¶

by TierNolan

(see Handout)Handout¶

more detail to come…

A picks a random number x
A creates TX1: "Pay w BTC to <B's public key> if (x for H(x) known and signed by B) or (signed by A and B)"
A creates TX2: "Pay w BTC from TX1 to <A's public key>, locked 48 hours in the future, signed by A"
A sends TX2 to B
B signs TX2 and returns to A

1) A submits TX1 to the network

B creates TX3: "Pay v alt-coins to <A-public-key> if (x for H(x) known and signed by A) or (signed by A and B)"
B creates TX4: "Pay v alt-coins from TX3 to <B's public key>, locked 24 hours in the future, signed by B"
B sends TX4 to A
A signs TX4 and sends back to B

2) B submits TX3 to the network
3) A spends TX3 giving x
4) B spends TX1 using x

This is atomic (with timeout). If the process is halted, it can be reversed no matter when it is stopped.

Before 1: Nothing public has been broadcast, so nothing happens
Between 1 and 2: A can use refund transaction after 48 hours to get his money back
Between 2 and 3: B can get refund after 24 hours. A has 24 more hours to get his refund
After 3: Transaction can be completed by each of the 2 parties

- A must spend his new coin within 24 hours or B can claim the refund and keep his coins
- B must spend his new coin within 48 hours or A can claim the refund and keep his coins

For safety, both should complete the process with lots of time until the deadlines.

Alternatives¶

Several decentralised exchanges (DEXs) exist, but the definition of a DEX is not clear

Examples:

Barterdex: https://komodoplatform.com/decentralized-exchange/

Bit Square (bisq): https://bisq.network/

etc

The missing link: Information flow¶

Recall the process:

A creates TX1: “Pay w BTC to <B’s public key> if (x for H(x) known and signed by B) or (signed by A and B)”
B creates TX3: “Pay v alt-coins to <A-public-key> if (x for H(x) known and signed by A) or (signed by A and B)”

So before any exchange is set up,

A needs to know that B wants to buy w BTC
B needs to know that A will sell for v alt-coins

Then, to be able to start the exchange

A needs to know B’s BTC public key
B needs to know A’s alt-coin public key

This information exchange needs to be done outside the transactions, as an MoU or “announcement(s) of intent”. The info exchange does NOT need to be binding! The info exchange should cost something to avoid spam.

During the exchange the parties need to communicate:

A sends TX2 to B
B signs TX2 and returns to A
B sends TX4 to A
A signs TX4 and sends back to B

The entire process needs to be without trust and without knowing who the other party is

Announcing the atomic swap¶

Use a forum (telegram etc)?
Use a specialised channel (BarterDex/Bisq)?
Use an existing coin (mempool)?
Alice should in principle be able to use the Smileycoin blockchain to announce

SELL 1000 SMLY for 1 LTC

and Bob could accept the offer by responding

ACCEPT offer TxId`

etc.

Could be done through modifications of smileycoin-qt

A draft proposal: https://tutor-web.info/news-1/announcing-intent-cross-chain-atomic-swap/

Dedicated wallets? https://atomicwallet.io/ (or scam?)

Atomic swaps between chains: Litecoin and Bitcoin¶

One of the first ones: https://twitter.com/SatoshiLite/status/911328252928643072

10 LTC for 0.1137 BTC

The Litecoin side: https://insight.litecore.io/address/ML9CNJBtSPMABYcCQV58P2t4M7MpPRJK95

The Bitcoin side: https://insight.bitpay.com/address/3HRWsfjpBHiJ7hC3jKJV5nbHMeBgoCPHDq

See also https://github.com/topics/atomic-swap for many, many atomic swap projects.

Handout¶

Bitcoin 0bb5a53a9c7e84e2c45d6a46a7b72afc2feffb8826b9aeb3848699c6fd856480

(note the locktime)

(takes the one below - 92d9c9… - as input)

{
  "txid": "0bb5a53a9c7e84e2c45d6a46a7b72afc2feffb8826b9aeb3848699c6fd856480",
  "hash": "0bb5a53a9c7e84e2c45d6a46a7b72afc2feffb8826b9aeb3848699c6fd856480",
  "version": 2,
  "size": 308,
  "vsize": 308,
  "weight": 1232,
  "locktime": 1506182939,
  "vin": [
    {
      "txid": "92d9c9d5d52c618b32484032a22f16dc084841ed29ec1b01c0119425a4e76d24",
      "vout": 1,
      "scriptSig": {
        "asm": "30440220748121e83bee8287a2506ca65256f5bf6b30c5d6948aa334a06c3dd70472a50002204b42d5fcd9d28a73cf9ec3f03f50ce2583802ca02883897a24c4854fdc3225e9[ALL] 025d15dd393c000cf9f9b8adf06d275c70959d13764dcb3ac99d0f583c6c1aba0d 6b7dba080c648b0a9eccd0a795ace167f5c124703a17eba9a3d0f80162f0e330 1 63a6142c5b442dcfd70ed65b9c90956844525527d9ab3c8876a9143aa29799bae62940f3235cc58e0420359aa0fdf867041b87c659b17576a91470d0975d5053bc3291e0bad4c08d88e41d9ef5366888ac",
        "hex": "4730440220748121e83bee8287a2506ca65256f5bf6b30c5d6948aa334a06c3dd70472a50002204b42d5fcd9d28a73cf9ec3f03f50ce2583802ca02883897a24c4854fdc3225e90121025d15dd393c000cf9f9b8adf06d275c70959d13764dcb3ac99d0f583c6c1aba0d206b7dba080c648b0a9eccd0a795ace167f5c124703a17eba9a3d0f80162f0e330514c5163a6142c5b442dcfd70ed65b9c90956844525527d9ab3c8876a9143aa29799bae62940f3235cc58e0420359aa0fdf867041b87c659b17576a91470d0975d5053bc3291e0bad4c08d88e41d9ef5366888ac"
      },
      "sequence": 4294967295
    }
  ],
  "vout": [
    {
      "value": 0.13336680,
      "n": 0,
      "scriptPubKey": {
        "asm": "OP_DUP OP_HASH160 5d8023cd65e3685726c5df8479206937b64264b9 OP_EQUALVERIFY OP_CHECKSIG",
        "hex": "76a9145d8023cd65e3685726c5df8479206937b64264b988ac",
        "reqSigs": 1,
        "type": "pubkeyhash",
        "addresses": [
          "19XPM9tgB2Avj2nF1S5JSM9zJM6oGyH41w"
        ]
      }
    }
  ]
}

Bitcoin 92d9c9d5d52c618b32484032a22f16dc084841ed29ec1b01c0119425a4e76d24

(forms input to the one above)

{
  "txid": "92d9c9d5d52c618b32484032a22f16dc084841ed29ec1b01c0119425a4e76d24",
  "hash": "92d9c9d5d52c618b32484032a22f16dc084841ed29ec1b01c0119425a4e76d24",
  "version": 2,
  "size": 224,
  "vsize": 224,
  "weight": 896,
  "locktime": 0,
  "vin": [
    {
      "txid": "82ae3ad6c30957a022ef5648ee6bd1883793f34adb1273532fecb842b90d07d7",
      "vout": 1,
      "scriptSig": {
        "asm": "3045022100eabcf4e2d7ca45b54b951624e38caaed7c18598e5091ff3ebf2015db6acef9d702203ff1355dd0c37acf3226250a1aa0ec0b3c1eb829302fa6e60d179a51311486e9[ALL] 02fe470a170035bf78d94c47629ca681c5e08501e9888a5a5dcb918186cb8d4175",
        "hex": "483045022100eabcf4e2d7ca45b54b951624e38caaed7c18598e5091ff3ebf2015db6acef9d702203ff1355dd0c37acf3226250a1aa0ec0b3c1eb829302fa6e60d179a51311486e9012102fe470a170035bf78d94c47629ca681c5e08501e9888a5a5dcb918186cb8d4175"
      },
      "sequence": 4294967294
    }
  ],
  "vout": [
    {
      "value": 0.01629776,
      "n": 0,
      "scriptPubKey": {
        "asm": "OP_DUP OP_HASH160 462f954c6ae2bcf54107191b42d22419f928995e OP_EQUALVERIFY OP_CHECKSIG",
        "hex": "76a914462f954c6ae2bcf54107191b42d22419f928995e88ac",
        "reqSigs": 1,
        "type": "pubkeyhash",
        "addresses": [
          "17Q7JZsAn4iKotrjpfk7H5WzLnznRVyWSU"
        ]
      }
    },
    {
      "value": 0.13370000,
      "n": 1,
      "scriptPubKey": {
        "asm": "OP_HASH160 ac938614bf4288b3e41385d49fc0531d847551ff OP_EQUAL",
        "hex": "a914ac938614bf4288b3e41385d49fc0531d847551ff87",
        "reqSigs": 1,
        "type": "scripthash",
        "addresses": [
          "3HRWsfjpBHiJ7hC3jKJV5nbHMeBgoCPHDq"
        ]
      }
    }
  ]
}

Litecoin 6c497ae07505f6237a810deb4fb366b9d73a2293ce8d8fba21e6203bf93854d2

(note the locktime)

(takes the one below - 75d0ab… - as input)

{
  "txid": "6c497ae07505f6237a810deb4fb366b9d73a2293ce8d8fba21e6203bf93854d2",
  "hash": "6c497ae07505f6237a810deb4fb366b9d73a2293ce8d8fba21e6203bf93854d2",
  "size": 308,
  "vsize": 308,
  "version": 2,
  "locktime": 1506204007,
  "vin": [
    {
      "txid": "75d0ab5f6a9da8633c8da91b791a28641c71234ea1bcfbb30ee8eb7f07b70721",
      "vout": 1,
      "scriptSig": {
        "asm": "304402203faac90d00b21bce1079b402a201692e2bc0ebbc22bfb9476dd4a73e8969b2b702205a077a6eb15a9f98a6f61d3a5c0876c1850c5742e4ca4816c2a61b5e97ff8954[ALL] 02c6183a9cfa40ae70845c9125e3dc16b5412a3fc433c8b5698fd5bba49d795efe 6b7dba080c648b0a9eccd0a795ace167f5c124703a17eba9a3d0f80162f0e330 1 63a6142c5b442dcfd70ed65b9c90956844525527d9ab3c8876a91497cf2d5d3d30dc84b3aa09d68372d2533753b538670467d9c659b17576a91493cc61870ae8c76ccc7926f5c70dec4f5761a58b6888ac",
        "hex": "47304402203faac90d00b21bce1079b402a201692e2bc0ebbc22bfb9476dd4a73e8969b2b702205a077a6eb15a9f98a6f61d3a5c0876c1850c5742e4ca4816c2a61b5e97ff8954012102c6183a9cfa40ae70845c9125e3dc16b5412a3fc433c8b5698fd5bba49d795efe206b7dba080c648b0a9eccd0a795ace167f5c124703a17eba9a3d0f80162f0e330514c5163a6142c5b442dcfd70ed65b9c90956844525527d9ab3c8876a91497cf2d5d3d30dc84b3aa09d68372d2533753b538670467d9c659b17576a91493cc61870ae8c76ccc7926f5c70dec4f5761a58b6888ac"
      },
      "sequence": 4294967295
    }
  ],
  "vout": [
    {
      "value": 9.99968600,
      "n": 0,
      "scriptPubKey": {
        "asm": "OP_DUP OP_HASH160 ee3c065dab61a1ed0020eb1c456226600dc44af3 OP_EQUALVERIFY OP_CHECKSIG",
        "hex": "76a914ee3c065dab61a1ed0020eb1c456226600dc44af388ac",
        "reqSigs": 1,
        "type": "pubkeyhash",
        "addresses": [
          "LgwczUBhCr6XfEWaG4JA22Gi7fW5N38vM1"
        ]
      }
    }
  ]
}

Litecoin 75d0ab5f6a9da8633c8da91b791a28641c71234ea1bcfbb30ee8eb7f07b70721

{
  "txid": "75d0ab5f6a9da8633c8da91b791a28641c71234ea1bcfbb30ee8eb7f07b70721",
  "hash": "75d0ab5f6a9da8633c8da91b791a28641c71234ea1bcfbb30ee8eb7f07b70721",
  "size": 223,
  "vsize": 223,
  "version": 2,
  "locktime": 0,
  "vin": [
    {
      "txid": "d06f0729fda1564b77480bd38d2a0524b82ae8930a1dec554a26ff82ba146e80",
      "vout": 0,
      "scriptSig": {
        "asm": "304402207325eba06b5a18fb9edadb2c646ee50cffe8062dd64024488419665bf080bd9e0220635242020e26b537d1aa1eef45a0f0ff96375c6743a3093afed373b844a15380[ALL] 03025492162771fe8dac8c74bcf344fb2ff48172482afa2d2a8a9fd09caa0fe79e",
        "hex": "47304402207325eba06b5a18fb9edadb2c646ee50cffe8062dd64024488419665bf080bd9e0220635242020e26b537d1aa1eef45a0f0ff96375c6743a3093afed373b844a15380012103025492162771fe8dac8c74bcf344fb2ff48172482afa2d2a8a9fd09caa0fe79e"
      },
      "sequence": 4294967294
    }
  ],
  "vout": [
    {
      "value": 0.89955000,
      "n": 0,
      "scriptPubKey": {
        "asm": "OP_DUP OP_HASH160 8b97fa16960b86f69db5d16da02147642aa91494 OP_EQUALVERIFY OP_CHECKSIG",
        "hex": "76a9148b97fa16960b86f69db5d16da02147642aa9149488ac",
        "reqSigs": 1,
        "type": "pubkeyhash",
        "addresses": [
          "LXx4FRCeEbZyRB5BNkVR9iNP9oUJzMmNSz"
        ]
      }
    },
    {
      "value": 10.00000000,
      "n": 1,
      "scriptPubKey": {
        "asm": "OP_HASH160 86491d98a99146ab22a066e0d8e6f3a403071af8 OP_EQUAL",
        "hex": "a91486491d98a99146ab22a066e0d8e6f3a403071af887",
        "reqSigs": 1,
        "type": "scripthash",
        "addresses": [
          "ML9CNJBtSPMABYcCQV58P2t4M7MpPRJK95"
        ]
      }
    }
  ]
}

Atomic swaps¶

Background¶

timeouts¶

Handout¶

an atomic swap algorithm¶

(see Handout)Handout¶

Alternatives¶

The missing link: Information flow¶

Announcing the atomic swap¶

Atomic swaps between chains: Litecoin and Bitcoin¶

Handout¶

Cryptocurrency and the Smileycoin (crypto251.0)

Navigation

Related Topics