Komodo Launches AtomicDEX Beta Bringing Atomic Exchanges to Ethereum and Bitcoin
Komodo’s AtomicDEX seeks to connect Ethereum with Bitcoin and other UTXO networks.
The Komodo project launched this Friday the public beta of its latest product, AtomicDEX. The platform seeks to allow atomic swaps between different blockchains, it is currently connecting Ethereum and its tokens to blockchains such as Bitcoin (BTC), Litecoin (LTC) and Dogecoin (DOGE).
The use of atomic swaps allows users to directly trade with the native tokens. Someone buying Ether (ETH) with BTC would simply exchange ownership of the respective coins on their blockchains, without having to use intermediary token representations.
The integration comes within a dedicated multi-blockchain wallet built by Komodo, which includes the Atomic Swap feature. The beta version of the trading system was officially launched last Friday at 6 p.m. UTC.
Atomic swaps are a type of cross-chain interaction in which special cryptographic techniques, usually based on hash-time locked contracts, or HTLC, ensure that two transfers either occur at all or not at all. This means that two parties to an exchange transaction will exchange funds simultaneously, and if either party backs down, the transaction is canceled.
In a conversation with Cointelegraph, Komodo’s pseudonymous COO known as JC said the project aims to connect most blockchain environments, with upcoming integrations including the Cosmos ecosystem (ATOM) and Qtum. In general, the mechanism can support almost any type of blockchain, although each integration must be added manually. The team is also working on the integration of the privacy coin Monero (XMR), albeit with a lower priority.
The exchange uses a more classic model of a decentralized order book that supports torrent-based technologies. This is in contrast to the most popular type of decentralized exchange today, based on automated market makers like Uniswap. The project is also using Band Protocol oracles to set price targets, although for assets that are not supported by Oracle’s network, the system relies on CoinGecko. Moving forward, the team plans to integrate Chainlink, “since we don’t have to be married to a single Oracle solution,” JC said.
JC assured that the system does not custody or control the funds at any point in the mechanism, and pointed out that “decentralization slows down the development process, we cannot simply put it all together.” One possible downside to the mechanism is the requirement for higher security, which requires waiting for blockchains to confirm the exchange, JC noted, although this is common to DEXs in general.
Atomic swaps can be a valid alternative to join tokens with other blockchains, a process that is usually centralized due to technical limitations. For example, many popular Bitcoin containers on Ethereum are facilitated by escrow agents, such as BitGo in the case of Wrapped BTC. At the same time, wrapping a token simplifies the process of using it on another blockchain, as once initial liquidity hurdles are overcome, it becomes a relatively seamless process. The rise of DeFi has allowed Wrapped BTC to reach wide acceptance, facilitating its exchange or use in lending protocols.
There may also be liquidity hurdles for atomic swap platforms, but the solution could be particularly attractive for purists who do not want to rely on centralized entities overseeing the issuance of the token.
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