Ping-Pong Swaps

TL;DR

Ping-Pong Swaps introduces a secure, peer-to-peer crosschain token swap mechanism that eliminates the need for escrow, trusted third parties, or bridges, enabling decentralized and anonymous cryptocurrency trading.

Contribution

The paper presents a novel crosschain swap method using unidirectional payment channels, allowing direct peer-to-peer exchanges without intermediaries or centralized platforms.

Findings

Enables anonymous crosschain token swaps without escrow or bridges

Facilitates non-custodial exchanges and peer-to-peer markets

Applicable to fiat currencies with bank payment channels

Abstract

We propose Ping-Pong Swaps: A secure pure peer-to-peer crosschain swap mechanism of tokens or cryptocurrencies that does not require escrow nor an intermediate trusted third party. The only technical requirement is to be able to open unidirectional payment channels in both blockchain protocols. This allows anonymous cryptocurrency trading without the need of a centralized exchange, nor DEX's in DeFi platforms, nor multisignature escrow systems with penalties. Direct peer-to-peer crosschain swaps can be performed without a bridge platform. This enables the creation of non-custodial exchanges and also a global peer-to-peer market of pairs of tokens or cryptocurrencies. Ping-pong swaps with fiat currency is possible if banks incorporate simple payment channel functionalities. Some immediate applications are simple and fast rebalancing of Lightning Network channels, and wrapping tokens in smartchains.