The Komodo Project launched the public beta of its newest product, AtomicDEX, on Friday. The platform is intended to enable trustworthy atom swaps between different blockchains and currently connects Ethereum and its tokens with blockchains such as Bitcoin (BTC), Litecoin (LTC) and Dogecoin (DOGE).
By using Atomic Swaps, users can trade the native tokens directly. Someone who buys Ether (ETH) with BTC simply exchanges ownership of the respective coins on their blockchains without having to use intermediate token representations.
The integration takes place in a dedicated multi-blockchain wallet developed by Komodo that contains the atomic swap function. The beta of the trading system was officially started on 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 HTLCs, ensure that two transfers are either complete or not at all. This means that two parties to an exchange transaction are exchanging money at the same time. If either party withdraws, the transaction will be aborted.
Speaking to Cointelegraph, Komodo’s pseudonymous chief operating officer known as JC said the project aims to connect most blockchain environments with upcoming integrations like the Cosmos (ATOM) ecosystem and Qtum. In general, the mechanism can support almost any type of blockchain, although any integration must be added manually. The team is also working on the integration of the data protection coin Monero (XMR), albeit with a lower priority.
The exchange uses a more classic model of a decentralized order book supported by torrent-based technologies. This is in contrast to today’s most popular type of decentralized exchange, which is based on automated market makers like Uniswap. The project also uses Band Protocol oracles to set target prices. However, the system relies on CoinGecko for assets that are not supported by the Oracle network. In the future, the team plans to integrate Chainlink, “because we don’t just have to be married in one oracle solution,” said JC.
JC assured that at no point in the mechanism does the system hold or control funds, noting that “decentralization is slowing down funds [development] Process, we can’t just slam it all up. “One potential downside to the mechanism is the need for higher security that requires waiting for blockchains to confirm the trade, JC noted, although this is a common practice with DEXs in general.
Atomic swaps can be a valid alternative to bridging tokens with other blockchains, a process that is usually centralized due to technical limitations. For example, many popular Bitcoin wrappers on Ethereum are supported by custodial agents, like BitGo in the case of Wrapped BTC. At the same time, wrapping a token makes it easier to use in another blockchain, as it becomes a relatively seamless process once the initial liquidity hurdles have been overcome. The DeFi boom has allowed Wrapped BTC to gain wide adoption, making it easier to exchange or use in credit logs.
There may also be liquidity hurdles for atom-swap platforms, but the solution could be particularly attractive to purists who don’t want to rely on centralized units to oversee the issuance of the token.