Facilitating Liquidity

Atomic swaps only solve the problem of trading across chains in a trustless way. It does not, however, solve the problem of how both sides of the trade find one another. In fact, the way many atomic swaps have been demonstrated technically has relied upon the fact that both trading parties do not just know of each other, but are in constant communication over some instant messaging system.

To help facilitate liquidity, LX feeds outside exchange pricing for trading pairs (e.g.: BTC vs LUX). LUX, as a coin, will be traded on different centralized exchanges after crowd-sales to all witness nodes, which will then post the fed-in price onto the chain. Users then place swap orders with desired pricing also onto the chain, the witness nodes then will automatically match these orders. During the initial bootstrapping phase of the ecosystem, Lux will incentivize experienced market makers and trading-bots to provide much needed liquidity boost. Some traditional gateways developed and operated by the LX core team or other competent ecosystem partners will be long-term coexist with atomic swap capability to provide IOU service with high level security.

LX has already launched a project to integrate a LX client into a multi-cryptocurrency wallet supporting customized BTC script and multi-signature, hardware security level in second phase. This project can facilitate swaps in one wallet with one click to be more user friendly.

The swap capability between LX and other mainstream cryptocurrencies will innovate many financial tools, such as stable priced crypto-assets capable of maintaining price parity with a globally adopted currency (e.g., USD). It has high utility for convenient and censorship-resistant commerce. This can be achieved by tracking the value of a conventional underlying asset such as gold by means of an over-collateralized, counterparty risk-free, smart-contract secured blockchain loan.