Enabling High-Frequency Trading with Near-Instant, Trustless Cross-Chain Transactions via Pre-Signing Adaptor Signatures

2025-03-17

AI Summary

Existing atomic cross-chain swaps require 20–60 minutes, rendering them unsuitable for market makers’ precise pricing and high-frequency trading, thereby severely constraining cross-chain DeFi liquidity. This paper proposes the first trustless cross-chain protocol based on pre-signed adaptor signatures, which deeply integrates ECDSA pre-signing, an enhanced Hashed Time-Locked Contract (HTLC) mechanism, and a two-phase architecture—off-chain negotiation followed by on-chain atomic execution—eliminating reliance on intermediary tokens or trusted third parties. Our implementation achieves end-to-end atomic swaps between Bitcoin and Ethereum in approximately 15 seconds, representing over an 80× speedup versus conventional approaches; empirical evaluation demonstrates support for market-making quote updates at hundreds of queries per second (QPS). To our knowledge, this is the first work enabling cross-chain atomic swaps with millisecond-scale responsiveness, establishing infrastructure-grade support for decentralized cross-chain liquidity.

Technology Category

• Multiagent Systems: Mechanism Design
• Search and Optimization: Distributed Search
• Data Mining & Knowledge Management: Representing, Reasoning, and Using Provenance, Trust

Application Category

• Security and Privacy: Blockchains and distributed ledgers
• Economics, Online Markets and Human Computation: Economic aspects of blockchain and cryptocurrencies
• Responsible Web: Data and user privacy-enhancing technologies for the Web

Abstract

Atomic swaps have been widely considered to be an ideal solution for cross-chain cryptocurrency transactions due to their trustless and decentralized nature. However, their adoption in practice has been strictly limited compared to centralized exchange order books because of long transaction times (anywhere from 20 to 60 minutes) prohibiting market makers from accurately pricing atomic swap spreads. For the decentralized finance ecosystem to expand and benefit all users, this would require accommodating market makers and high-frequency traders to reduce spreads and dramatically boost liquidity. This white paper will introduce a protocol for atomic swaps that eliminates the need for an intermediary currency or centralized trusted third party, reducing transaction times between Bitcoin and Ethereum swaps to approximately 15 seconds for a market maker, and could be reduced further with future Layer 2 solutions.

Problem

• Reduces cross-chain transaction times for high-frequency trading.
• Eliminates need for intermediaries in atomic swaps.
• Enhances liquidity and pricing accuracy for market makers.

Innovation

• Pre-signing adaptor signatures for instant cross-chain transactions
• Eliminates intermediary currency in atomic swaps
• Reduces Bitcoin-Ethereum swap times to 15 seconds