Author: ZmnSCPxj 2019-04-23 03:51:48
Published on: 2019-04-23T03:51:48+00:00
The email thread discusses the use of atomic swaps to perform BTC to WJT exchanges with properly-incentivized American Call Options. The process involves generating a secret and hash, creating HTLCs with timelocks and premiums that are payable to different parties depending on whether the payment goes through or not. However, extending this process beyond one hop after the exchange node is difficult due to communication problems and potential avenues for attack. One solution is to put the premium before the exchange node with an additional transaction, but this is unsafe as the exchange or any node between the payer and the exchange can stall the protocol deliberately and extract the premium via the timelock branch. This effectively forces fees even in a route failure, which does not incentivize intermediate nodes to actually forward when they can do nothing and receive fees anyway for not routing.
Updated on: 2023-06-02T16:21:24.952695+00:00