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Atomic Swaptions: Cryptocurrency Derivatives

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  • James A. Liu

Abstract

The atomic swap protocol allows for the exchange of cryptocurrencies on different blockchains without the need to trust a third-party. However, market participants who desire to hold derivative assets such as options or futures would also benefit from trustless exchange. In this paper I propose the atomic swaption, which extends the atomic swap to allow for such exchanges. Crucially, atomic swaptions do not require the use of oracles. I also introduce the margin contract, which provides the ability to create leveraged and short positions. Lastly, I discuss how atomic swaptions may be routed on the Lightning Network.

Suggested Citation

  • James A. Liu, 2018. "Atomic Swaptions: Cryptocurrency Derivatives," Papers 1807.08644, arXiv.org, revised Mar 2020.
    • Handle: RePEc:arx:papers:1807.08644
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