Enabling Cross-chain Transactions: A Decentralized Cryptocurrency Exchange Protocol
This addresses security issues in cryptocurrency trading for users by enabling decentralized exchanges, though it appears incremental as it builds on existing blockchain and smart contract technologies.
The paper tackles the problem of centralized cryptocurrency exchanges being vulnerable to attacks by proposing a decentralized protocol for cross-chain transactions, achieving trading between different cryptocurrencies with acceptable cost as proven experimentally.
Inspired by Bitcoin, many different kinds of cryptocurrencies based on blockchain technology have turned up on the market. Due to the special structure of the blockchain, it has been deemed impossible to directly trade between traditional currencies and cryptocurrencies or between different types of cryptocurrencies. Generally, trading between different currencies is conducted through a centralized third-party platform. However, it has the problem of a single point of failure, which is vulnerable to attacks and thus affects the security of the transactions. In this paper, we propose a distributed cryptocurrency trading scheme to solve the problem of centralized exchanges, which can achieve trading between different types of cryptocurrencies. Our scheme is implemented with smart contracts on the Ethereum blockchain and deployed on the Ethereum test network. We not only implement transactions between individual users, but also allow transactions between multiple users. The experimental result proves that the cost of our scheme is acceptable.