The InziderX decentralized exchange based on wallet is possible because of two technologies that have recently proved their value. Atomic swap and the Lightning Network.
A decentralized platform based solely on user wallet (Dapp) that allows the exchange of assets between these wallets have an ingenious feature: the atomic swap between blockchain.
An atomic swap is the exchange between two digitals assets without the intervention of a third party.
Previously, in all situations of exchange between two parties, it was necessary to use the services of a third party to establish a relationship of trust between users. None of them wants to send their assets first without the assurance that the other party will fulfill its promise.
Since all users trust the third party in their task of transmitting funds between participants only if all conditions are met, they have no hesitation in trading on their exchange.
However, as discussed earlier, the latest hacks on centralized exchanges have eroded this trust to the point of being non-existent. Using these platforms is putting yourself in a hostage position.
The atomic swap avoids this situation with a process called “time hash lock contract”. This option is activated by basic functions written in the code of Bitcoin and most other altcoins.
In action, if Alice wants to sell 50 LTC for 1 BTC and Bob accepts the transaction, a transaction on each of the blockchains is processed. Bob sends 1 BTC into a mulsignatures address to Alice and Alice sends 50 LTC to Bob into a mulsignatures address.
However, the trick is that Alice can only claim 1 BTC if she reveals a secret code (hash). And it’s the same for Bob, so he can only access Alice’s 50 LTC if he reveals his secret code (hash). In the opposite case, each one recovers his assets after a short time (time-lock).
In this way, Alice and Bob can make a safe transaction between themselves without the intervention of a third party and without having to trust each other. Because even if the transactions are carried out on different blockchains, they are in fact interrelated by mutual conditions.
1-Alice generates a secret code (hash) and initiates the transaction by sending the LTC into a mulsignatures address that can not be claimed without the secret code.
2-Bob generates a secret code (hash) and initiates the transaction by sending the BTC into a mulsignatures address which can not be claimed without the secret code.
3-At this point, Alice can not claim the BTC and Bob can not claim the LTC.
4-In order to cash the BTC, Alice reveals her secret code (hash) and when Bob uses this code, automatically his hash is transmitted to Alice which releases the BTC.
The secret code (hash) is included in the output of a transaction and then requested in the input to release the funds.
The exchange is atomic because it only occurs if the two transactions are processed, otherwise the exchange is canceled.
This is what the atomic swap allows : an exchange without third parties where the parties do not have to trust each other to negotiate between them.
All they are missing is a market place to meet and make known their intention of exchange.
InizderX will be this agora.
Another advantage is the fact that it is possible to negotiate between them any digital assets listed on the exchange. So that users are not limited to the pairs usually listed.
For example, on a centralized exchange, if the pair BTC / ETH and XRP / BTC are listed, it is not certain that it’s possible to trade the ETH / XPR pair if the centralized exchange does not offer it.
On a decentralized exchange with atomic swap, it is possible to negotiate all the digital assets listed on the exchange between them.
Considering that the InziderX exchange intends to list the twenty digital assets with the most large caps, this makes 180 pairs of digital assets available for trading.
The Lightning Network is a two-way payment protocol that operates separately from the blockchain, in parallel.
This payment channel allows :
Instant payments on the blockchain without having to worry about block confirmation times.
Security is enforced by smart contracts without creating a blockchain transaction for individual payments.
Capable of millions to billions of transactions per second across the network.
Cheap transactions. By performing transactions separately from the blockchain (off-chain), the Lightning network allows exceptionally low fees, allowing instant micropayments.
The transfer between blockchains. Cross-atomic exchanges can occur off-line instantly with heterogeneous blockchains consensus rules.
As long as blockchains can support the same cryptographic hash function, it is possible to perform transactions on a blockchains without having to trust a third party.
With the functions CheckSequenceVerify (CSV), that blocks the assets for a specific number of blocks and the one of the secret hash, the cryptographic aspect, that atomic exchange, all this is possible.
The advantage of this technology for the InziderX exchange is the liquidity it provides.
The exchange InziderX proposes to create is a marketplace where all other exchanges can connect.
With BIP65 and BOLT, which standardizes the protocols used by network users, all this is possible and will be the reality of tomorrow.
In a way, there will only be one market left. A market connected to markets. Wallets will be just an exchange window to access them.
That’s the vision of InziderX!
Create a wallet that is by itself an exchange that is connected to all exchanges using the same protocols and create a “world order book”.
A relay that integrates the Lightning Network and allows everyone to participate and form a decentralized network of liquidity.
In this way, any liquidity provider, whether it’s another exchange or a private institution that has a market maker program, will be able to connect to our exchange.
The benefits for these liquidity providers are obvious : a new clientele.
The standardization of the protocols used by the users of the networks will allow this ingenious technological advance and will guarantee an unparalleled liquidity to our exchange.
InziderX will be in touch at the opening of its exchange with private liquidity providers and will offer them plans for reduced transaction fees for a defined period that can be renewed if
necessary. We will also establish relays with centralized exchanges whose volume is the largest.
Other network participants who want to connect to our exchange and use the same protocols will have the possibility to add their volume to the order book.
Market Maker Program
The InziderX exchange will establish from its launch a program that favors market makers.
Limit orders are orders that provide volume to the order book and will be processed with a reduced transaction fee. For example 0.1% instead of 0.02%.
These transaction fees will also be reduced according to the volume of transactions of the user.
Here is an example :
Volume in last 30 days
$ 0 and up 0.1%
$ 100,000 and up 0.08%
$ 250,000 and up 0.07%
$ 500,000 and up 0.06%
$ 1,000,000 and over 0.05%
$ 2,000,000 and over 0.04%
$ 5,000,000 and up 0.0175%
$ 7,000,000 and over 0.00%
Taking the example of the stock market where high-frequency traders receive a premium for placing orders, a portion of the transaction fees charged to all users will be redistributed through a reward program to traders who have the largest volume of transactions.
For example, an institution that maintains a volume of more than $ 10,000,000 of volume executed in the last 60 days will receive a return of 0.01% on placed orders.
This will be a strong motivation for liquidity providers to maintain a volume on our exchange.
Arbitrage is the purchase of an asset at a lower price on an exchange and the sale of the same asset at a higher price on another exchange.
Previously, in order to take advantage of these price differences between centralized exchanges, it was necessary to maintain a portfolio in each of those exchanges and to have twice the negotiated power.
For example, if the price of the BTC is $ 8000 on exchange A and $ 8,500 on exchange B, the trader buys 1BTC in his account on exchange A and sells 1 BTC in his account on exchange B in order to enjoy a gain of $ 500.
With the new technology and protocol standardization, it will be possible for a trader to buy on an exchange and instantly transfer it to another exchange for sale. You do not need to have twice the exchange value.
This will result in a terribly efficient marketplace with tight spreads and reduced slippage.
The InziderX exchange API with its clear and varied controls will automatically manage this type of trades. So that a negotiator will be able to automate all this process from predefined actions in his code and make an instant exchange between them.
The wallet is one of the important elements of a decentralized exchange because it is the tool on which the exchange is based.
It is also the first window that the novice user will have on the world of digital assets. It must be easy to use and intuitive in its design.
Beyond these considerations, it must include the basic and advanced options necessary to support the exchange.
– Send / receive / contact list
– Estimation and adjustment of transfer fees
– Segwit2 Technology
Account value history
A section will display the value of the account according to a given history. It will be possible to establish a chart by selecting the set of digital assets in the portfolio if not one or some. This will be handy for assessing which assets should be prioritized for diversification.
An interesting option in this portfolio is stacking. It allows you to make margin financing and thus make your funds work to accumulate a passive return. The funds are still safe in the wallet.
In addition to the “stacking” it will be possible to mine directly in the portfolio the digital asset INX that supports our exchange. A miner pool will be created and it will be possible to allocate a mining power from your computer to this task.
HD wallets Integration
With the latest advanced blockchain technology revolution such as atomic swap and Lightning Network, it is possible to perform instant transfers that are without risk for both parties.
It is therefore possible to integrate in our exchange other portfolios that use the same technologies. We are therefore studying the possibility of integrating portfolios such as LedgerNano S and Metamask into our exchange.
For those who know the security level of a Nano S key, this is another layer of security to our exchange. So in addition to being decentralized, the user can use a technology that prevents his private keys are held directly on his computer and rather in cold storage with air gap.
This wallet, which includes several modules, will be available in Native — Full node mode or in Electrum mode — light node version which does not oblige the user to download all the transaction history of the assets they wish to negotiate.
Instant and Untraceable Encrypted Message
The wallet includes an anonymous and untraceable encrypted email system based on the blockchain. Knowledge groups can be formed to share real-time insights into the price action of a particular asset.
https://inziderx.io/docs/InziderX.io-Economics.pdf — #InziderX #Exchange #ico