Cross-chain trading

This is probably a naive question, but is there any reason Saturn Network couldn’t make use of Ripple’s Interledger protocol for trading between ETH and ETC and associated tokens -and any future chains that Saturn Protocol is put onto?

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TLDR: If ILP was really decentralized, trustless, uncensorable it would have already been used by us and everyone else. Read below to find why people with technical understanding of blockchains will never integrate ILP into true decentralized tech.

Unfortunately ILP is more marketing than tech, just like most things Ripple. The closest decentralized version would be multi-chain payment channels (like Charlie Lee described here). The gist of it is that if I have LTC, but want to send BTC to my friend, I can ask one of the lightning nodes to do the conversion for me. The swap itself will be trustless, and if one node doesn’t want to do it with me - another will, hence there is built-in censorship resistance. Other cryptos, such as ETH ETC ZEC, can be added to this mesh too. Alas, this technology will take 2-3 more years to build at current pace.

ILP is Ripple’s answer to that. “Why wait when we have fantastic, trusted banks!”. Read through their official documentation. Of course, there is plenty of technobabble and marketing buzzwords. But now that you know it’s a less secure version of Lightning hops, you’ll be able to see how ILP is useless outside of regulated compliant money transfer - at which point you might as well use Visa or Apple Pay.

There are ways to transfer value across chains, and they all come with different tradeoffs, ultimately the market will decide. You can break those down into stablecoin designs (e.g. DAI is pegged to USD, but one can launch a similar coin on ETC that tracks the price of BTC, for example, or the price of AAPL stock), pegged assets with multisig custody (tBTC, WBTC, WETC, Poa’s tokenbridge, Metronome MET), or with a controlling federation (Bancor’s BNT, Blockstream LBTC).

Now let’s talk about how we think cross-chain decentralized trading will look like.

Ultimately the most decentralized would be atomic swap schemes, but trading via atomic swaps is tricky because it will look less like Binance/Coinbase/NYSE trading experience, and more like LocalBitcoin/LocalEthereum trading experience, and will require people to be comfortable and familiar with using multi-currency dapp crypto wallets - currently only Saturn Wallet provides adequate user experience, with Trust Wallet in close second place (switching networks there is a bit harder, they did not optimize for multi-chain dapps).

Down the road, once we have enough people using our platform daily, we have plans to enable such cross-chain atomic swap marketplace. As of today it would be a foolish way to spend our very limited time - we’d develop amazing cutting edge tech all for <100 users, and without enough people and $$$ to bootstrap the network this cutting edge technology won’t shine the way it should.

Of all people/orgs, BitMex actually did the best research on the topic of atomic swaps, take a look https://blog.bitmex.com/atomic-swaps-and-distributed-exchanges-the-inadvertent-call-option/

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Thanks for all of this, Neuron! I wish I understood the tech well enough to understand the basic points better, but I’m trying to learn. And the links to the old articles are really helpful. Thanks again for taking the time.

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Just a quick question on the BitMex piece. It seems as if most of the optionality-risk in atomic swaps comes from the volatility that can occur within a 24 hour contract period. Maybe this is just the standard contract duration, and I can see how it is realistic when trading fiat currencies, but isn’t it kind of irrelevant when trading cryptos that can be exchanged in seconds? I must be missing something…

Indeed, this time period is arbitrary and a swap can be done much faster. However, it is important to note two points.

  1. Atomic swap cannot be done in 1tx. It must involve 4 transactions, 1 transaction on each chain by both trading parties. Which means that both trading parties must be online for the exchange to happen.
  2. Atomic swap is complete after all 4 transactions are mined. However, if after second transaction a trader disconnects for whatever reason there usually is a 24 period to unroll and reset