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

TL;DR

The paper tackles the slow pace of cross-chain atomic swaps by replacing HTLC-based designs with pre-signed adaptor signatures built on Schnorr signatures and Bitcoin's Taproot. This PTLC-based approach enables scriptless, private conditions and near-instant finalization for market makers once external conditions (e.g., ETH lock-up) are verified by an oracle, dramatically increasing liquidity and enabling high-frequency trading. Key contributions include a detailed adaptor-signature protocol, Taproot-script verifications, oracle-based unlocking, a factory contract pattern, and a facilitator-based ecosystem for scalable deployment. The work envisions significant practical impact by reducing cross-chain settlement times, enhancing privacy, and offering flexible integration with decentralized oracle networks, potentially transforming DeFi liquidity and trading efficiency.

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.