Published Nov 30, 2020
By Anthony Foy, CEO Qredo
Not your keys, not your coins. Qredo stays true to this mantra.
With the growing adoption of digital assets, many will want to swap between Bitcoin and Ethereum.
But how do you make the trade without giving up custody of your private keys and exposing yourself to the risks of a centralized exchange?
Atomic swaps code the transaction mechanism into the blockchain, letting you trade your bitcoin for ethereum directly, without giving up control of your private keys. This extends the idea of self-custody to trading — letting you sit back and swap your bitcoin for ether without the fear of needing to trust a third party.
Atomicity: a feature of databases dictating that a transaction must be all-or-nothing. It cannot be partially complete.
There are two types of atomic swaps to choose from: On-chain and Off-chain.
On-chain atomic swaps take place on the blockchain. Transactions are completely transparent, but limited by the performance bottlenecks of the underlying chain. This means on-chain atomic swaps can take 20-30 minutes or longer to be confirmed, and incur costly network fees.
Off-chain atomic swaps take place on a secondary layer off the underlying blockchain. Transactions can be private, instantaneous, and almost free.
As of yet, neither form of atomic swaps have caught on. On-chain swaps are slow and cumbersome, and implementing off-chain atomic swaps has proven technically difficult, leading the biggest figures in the community to call for a solution:
"We should put resources toward a proper (trustless, serverless, maximally Uniswap-like UX) ETH <-> BTC decentralized exchange. It's embarrassing that we still can't easily move between the two largest crypto ecosystems trustlessly." - Vitalik Buterin
Qredo atomic swaps
Our institutional-grade atomic swaps offer peer-to-peer trading with built-in governance.
Swap bitcoin for ether peer-to-peer as an individual trader, or as a multi-million dollar institution with delegated custodians.
Instantaneous (no waiting times for coins to arrive in wallet)
Bring your own custodian
No counterparty, third party, or settlement risk
Secured by decentralized multi-party computation
1 BPS, based on volume, with no gas or mining costs
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How Qredo atomic swaps work
Qredo's atomic swap implementation is built on a unique blockchain architecture.
Instead of relying on hashed time lock contracts, the atomic swap capability is baked into the operations of the blockchain.
When you make an atomic swap on the Qredo Network, you are exchanging an ownership right that grants you the ability to run an MPC protocol for the signing of asset transfers. On the underlying blockchains, nothing has moved. Only the ownership right has been exchanged.
Because the ownership right transfer takes place on the Qredo Network, there are no delays waiting for transactions to be confirmed on the underlying chain, and no miner or gas fees to pay.
Before the transfer takes place, a Proof of Coin protocol queries the underlying asset’s blockchain to verify that assets are available, removing counterparty risk.
By enabling instant transfer across chains with no counterparty risk, Qredo's atomic swaps are poised to disrupt cryptocurrency trading, opening up instant risk free trading capabilities and liquidity in digital asset dark pools.
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