weiDex - Decentralizad Exchange

fvafhae (28)in #weidex • 6 years ago

What is

weiDex is an exchange market that does not need to rely on a third party service to hold the customer's assets. weiDex uses smart contracts in order to ensure that trade occurs directly between users (peer to peer).
weiDex is a fully featured decentralized exchange (DEX), which guarantees the highest possible security, full transparency and open source logic. The main idea behind the decentralized exchange (DEX) is the removal of the third party.

Problems weiDex wants to solve

Nowadays cryptocurrency is not globally adopted. The reason of such circumstance is the challenges in cryptocurrency exchange, which have been a major setback to the growth of the industry.
These are some of the challenges plaguing cryptocurrencies:
• Poor liquidity
• Poor market regulations
• Long process of compliance
• Complex integration
Government is planning to legalize the digital currencies because Financial Institutions and banking sector benefits from these problems.
Additionally, some of centralized exchanges are plagued with poor security and lack of investor's protection that a more regulated financial sector enjoys. Since 2011 there have been multiple dozens of cryptocurrency heists and there are situations where many hacked exchanges had to shut down.

weiDex solution

To solve outlined problems weiDex is going to use Atomic Swap. Atomic Swap (also sometimes referred to as a cross-chain swap or trade) is a nearly instantaneous exchange of one cryptocurrency to another which does not require a middleman or third party to oversee the transaction.
In computer programming, atomic denotes a unitary action or object that is indivisible, unchangeable, whole, and irreducible. What this means is that either the trade will be completed in full or it will be canceled and both parties will get their coins back.

How does it work?

This example is going to use Bitcoin as the non-Ethereum cryptocurrency being traded. However, it works with any cryptocurrency that supports the same level of scripting as Bitcoin:
• Bitcoin Cash
• Bitcoin Gold
• Litecoin
• etc.
For this example, Bob holds Ether and John holds Bitcoin. Bob wants to give his Ether to John in exchange for his Bitcoins.

John generates a random secret key K and hashes it using SHA256 to generate a secret lock H(K).
John uses the secret lock, and a Bitcoin Script, to setup a transaction to Bob on the condition that he produces the secret key. If he does not do so within X hours then John can withdraw the funds.
John sends the secret lock H(K) to Bob along with the address of his transaction on the Bitcoin blockchain.
Bob checks John's transaction, verifying the details of the trade. If he does not agree then he does not need to do anything. After X hours, John can withdraw his funds.
Bob call a contract function with unique id that has been negotiated between both traders. He also uses the secret lock H(K) that was provided by John. This is a payable call and Bob must send his Ether when he makes this call.
John call another contract function to verify the details of the trade. If he does not agree, then he does not need to do anything. After X hours, Bob can invoke a contract function, getting a refund of his Ether.
John can now submit the secret key K associated with the secret lock to the smart contract. If he has provided the correct secret key, the contract will transfer Bob's Ether to John and store the secret key.
Bob can now acquire the secret key K.
Bob provides the secret key K to John's Bitcoin Script, and receives his Bitcoin.
This same process can be used to swap any other ERC Token for BTC.