Quick Swap: Faster Settlement in Cross-Chain Atomic Swaps

Abstract

<p>Hashed Timelock (HTLC)-based atomic swap protocols enable the exchange of coins between two or more parties without relying on a trusted entity. This protocol is like the American call option without premium. It allows the finalization of a deal within a certain period. This puts the swap initiator at liberty to delay before deciding to proceed with the deal. If she finds the deal unprofitable, she just waits for the time-period of the contract to elapse. However, the counterparty is at a loss since his assets remain locked in the contract. The best he can do is to predict the initiator’s behavior based on the asset’s price fluctuation in the future. But it is difficult to predict as cryptocurrencies are quite volatile, and their price fluctuates abruptly. We perform a game theoretic analysis of HTLC-based atomic cross-chain swap to predict whether a swap will succeed or not. From the strategic behavior of the players, we infer that this model lacks fairness. We discuss the properties of an ideal atomic swap and propose Quick Swap, a two-party protocol based on hashlock and timelock that fosters faster settlement of the swap. The parties are required to lock with griefing-premium along with the principal amount. If the party griefs, he ends up paying the premium. If a party finds a deal unfavorable, he has the provision to cancel the swap. Our work is the first to extend Quick Swap to a cyclic multi-party atomic swap setting.</p>