Decentralized exchange (just some basic thoughts on a concept ... )


#1

heyhey - the talk in the other forum about opening our own truly decentralized exchange made me wanting to share some thoughts about such an app … (i’m definitely not the smartest here - but maybe something useful comes out of my thoughts nonetheless ; )

maybe 2 party trustless escrow is something that could play a role there :thinking:

the idea basically is:

  • seller deposits the value of what he wants to sell
  • buyer pays 2x the price he wants to pay

all the money end up (somehow) in a multi-sig-address controlled by those 2 parties

-> when the seller has sent the product to the buyer -> both agree to give the seller 2x the price (1x his deposit + 1x the money the buyer needs to pay) and to give back to the buyer the 1x price he paid too much initially


if you do it like this you don’t need a trusted 3rd party … if the seller doesn’t send the product (the amount of the other currency he was offering for selling) he looses the value of exactly that amount of coin … so no win here …(actually … theres a small win because he would likely offer it slightly above market value … we’re talking about traders here … so i guess it would make sense to deposit slightly more than the current price …)

if the buyer doesn’t acknoledge that he received the coin (he actually did) the seller won’t be willing to release the funds either … so he would loose too …

if someone is cheating both parties loose - thats the basic idea

i first heard of it from bitmarkets

but seems like others picked up the idea too

…so… a trade on a 2 party trustless exchange could consist of 3 steps:

1.) multi-sig-transaction (2x value from buyer, 1x value from seller) to a multi-sig-wallet controlled by the 2 of them

2.) seller sends the other currency that is subject of the trade to the buyer

3.) money gets send back from the multi-sig-wallet to seller&buyer (but obviously 2x to seller now and 1x to buyer)

…hmhmmm - looks like quite some tx-fees if you buy from multiple sellers at the same time it looks to me :open_mouth: … (and to be honest i don’t know if the multi-sig-transaction that is needed in step 1 is supported by any currency, because that would be obviously necessary to be executed as atomic step to make sure nobody can trick anybody else… i just assumed that might be possible with some cryptocurrencies …)

ps: okay - my ignorance about kinds of transactions surfaced :smiley:
https://bitcoin.stackexchange.com/questions/35877/multisig-vs-multi-input-transaction-signing <<< seems like it would be a standard 2 input transaction just signed by 2 non-identical entities in this case

pps: damn :open_mouth: i get the feeling this really can work Oo … i need to have more spare time -.-" …