Transferable Cross-Chain Options

TL;DR

This paper introduces novel distributed protocols enabling the transfer of cross-chain options, allowing owners and providers to sell their positions securely without cheating or interference.

Contribution

It presents the first protocols for transferable cross-chain options, enhancing blockchain-based financial derivatives with secure transfer capabilities.

Findings

Protocols ensure secure, cheat-proof transfers

Supports transferability for both owners and providers

No unauthorized interference in the transfer process

Abstract

An option is a financial agreement between two parties to trade two assets. One party is given the right, but not the obligation, to complete the swap before a specified termination time. In todays financial markets, an option is considered an asset which can itself be transferred: while an option is active, one party can sell its rights (or obligations) to another. Todays blockchains support simple options in the form of cross-chain atomic swap protocols where one party has the choice whether to complete the swap. The options implemented by these cross-chain protocols, are not, however, transferable. This paper proposes novel distributed protocols for transferable cross-chain options, where both option owners and providers can sell their positions to third parties. The protocol ensures that none of the parties can be cheated, that no unauthorized party can interfere, and that the transfer succeeds if the buyer and seller faithfully follow the protocol.