Exchange Broker Network Layer and Collateralized DEX

Now that we have completed 3 out of 4 major milestones toward launching the fully functional GRAFT Network – a decentralized payment network that doesn’t depend on banks or centralized exchanges to provide credit/debit-card-like payment functionality anywhere, we’re moving on to the last major step – establishing a robust Exchange Broker layer that will support digital currency conversions inside the network.

In order to jumpstart this network, we’re looking to make the DEX usable both inside the network, as well as outside, to traders who are looking for a reliable, fast, decentralized, non-custodial trading platform and could eventually become an integral part of the network as exchange brokers.

About DEX’s

A few words about decentralized exchanges (DEX’s) – most of the DEX’s on the market today are either “on-chain” DEX’s, which means they only support exchanges (swaps) among tokens on that chain (Binance DEX for example), custodial/escrow solutions, or prototypes and proof-of-concepts based on time lock contracts.

GRAFT’s ability to leverage the network of supernode validators combined with $GRFT based collateral system, allows it to provide one of the few (if not only) real non-custodial, fast, atomic swap DEX, positioning it as a formidable DEX in its own right.

Collateralized Cross-chain Atomic Swaps

Atomics Swaps has been the holy grail of decentralized exchanges, however while sounding good on paper, they have some fundamental obstacles that haven’t been overcome yet.
  • They are slow (unless you use something like Lightning Network).
  • They don’t work for cryptocurrencies that don’t have smart contract support
  • A hash algorithm must be inherent to both of the participating cryptocurrencies
  • Time lock contract capabilities must be inherent to both cryptos
GRAFT is uniquely positioned to implementat atomic swaps or their equivalent in the real world by leveraging Supernodes as “independent validators” and trade orchestrators, with use of $grft based collateral or “bonds”.

Proposed Implementation

The currently proposed implementation is now available as RFC

Instead of using a shared secret/hash to ensure exchange transaction integrity, GRAFT’s atomic swap approach utilizes a “bond” or “collateral” posted by both sides to guarantee the payment. As such if one of the sides doesn’t deliver, they loose the bond which equals to the value of the swap. This approach avoids having to implement the same hash and time lock algorithms on both chains, and doesn’t require smart contract capabilities! This means that the atomic swaps become possible today without having to wait for all chains to agree on a standard and implementing it. Also because we’re separating the collateralized trade binding agreement from settlement, we can achieve fast trade confirmations to support the RTA payment flow. This is a BIG DEAL!

GRAFT Exchange Broker Usage and Models

GRAFT DEX will allow both individual direct exchanges as well as running an exchange broker as a business, supporting exchange transactions that originate at the point-of-sale or inter-network, broker-to-broker transactions. An exchange broker economic model would be based on buy/sell spreads and arbitrages, or preset margins, and could be automated using exchange broker client or other custom developed logic.

* Proposed EB Client UI. UI is available for download to collect feedback and flush out user experience.

Delivery and Timeline

DEX implementation leans heavily on the Supernode functionality that has already been built up for the RTA and staking. In addition, we have performed the proof-of-concept on most of the steps of the workflow so feel pretty comfortable with the feasibility.

We’re targeting GRAFT DEX with desktop clients and exchange broker to be ready early to mid October*, with early test versions available prior.
* this being fairly complex software development however, there’s always the possibility of slippages

More About Atomic Swaps and state of current state of DEX:

GRAFT DEX Frequently Asked Questions