🧬 MetaSwap

Cross-chain swaps with metatransactions

To kick things off, here is a diagram of the most basic possible Metaswap.

By now I hope you have questions, and I hope that this repo has answers.

Overview

MetaSwap is a protocol that leverages metatransactions to enable instant, 'economically-trustless', 'gassless' swaps between multiple assets, EVM chains, and Lightning invoices.

Currently, MetaSwap allows two parties to swap between any of the following:

Lightning Network
Any EVM chain base coin (ETH, ETC, RSK, TRX, etc.)
Any ERC20 token on any of these chains

Potentially, it supports any other other asset (such as NFTs or other token standards).

Right now MetaSwap is just a technical demo that demonstrates an absolutely minimal proof of concept implementation of the protocol and a basic UI to help understand this flow. MetaSwap was built for fun as a side project, so do not expect production level attention to detail, code quality or security guarantees.

This repo includes:

A contract; MetaSwap.sol in /contracts/
A frontend; metaswap.io in /app/

Demo

The easiest way to see how it works is to watch this demo video:

https://youtu.be/EtT9lcJenIk

A demo version of metaswap is deployed to https://metaswap.io/make. It has hard-coded accounts with no security to enable easy in-person demoing on a mobile phone. It is currently only enabled for Lightning Network, Kovan and Rinkeby.

Why?

Hopefully this mechanism can inspire similar projects to improve cross chain interoperability.

Advantages of MetaSwap

Compared to other swap systems such as atomic swaps or submarine swaps, MetaSwaps have some benefits:

Users don't need any existing assets on the chain they wish to on-ramp into
Swaps are FAST; they are 'settled' off-chain, so from the user's point of view they can happen instantly
Only a single transaction per asset per swap is required; less gas is consumed overall
The recipient address on either side of the swap can be any address, so users can swap directly into an exchange account or cold storage wallet
Users can pay for the transaction relay fee in any asset; swaps can happen even if neither party has Ether
Swaps are effectively settled off-chain, preventing certain types of frontrunning

How does MetaSwap work?

The system is quite simple, and relies on the following core process.

For each side of the swap, there are 4 accounts involved:

"Deposit Account", maker/taker who deposits and can withdraw funds that are locked on chain
"Signer", an address that the deposit account can delegate the ability to make swaps (useful for mobile swapping)
"Recipient", any address to receive swap
"Relayer", to be rewarded for publishing the swap

At least one side of the swap must have have deposited swappable assets in to the MetaSwap.sol contract on an EVM chain. These deposited assets will then be locked for X number of blocks (a cooldown period can be triggered before they are withdrawn again).

The current demo implements communication between parties via WebRTC, with messages encryped using their signer addresses.

Once the swappable funds are deposited, a swap can take place.

A preImage (random string of data) is generated by the maker of the swap
The maker hashes this preImage to create a preImageHash
The maker offers a the taker some amount of an asset that will be sent if the preImage is revealed on chain
The taker agrees to the swap by responding with a recipient address
The maker creates and shares a signed metatransaction that will send the funds to the taker if the preImage is revealed on-chain

At this point, the taker knows that if the preImage is revealed, it can be published along with the makers metatransaction to claim this side of the swap. So how can taker convince the maker to reveal the preImage?

In the case of Lightning, The maker provides a Lightning Invoice that will reveal the preImage upon payment (he generates an invoice and uses the same preImageHash).
In the case of an EVM chain, the taker, who has also deposited into MetaSwap.sol, signs a metatransaction with the other side of the swap using the same preImageHash as the maker, knowing that the maker will reveal it on-chain to claim their side of the swap.

The metatransaction that is revealed on-chain contains following properties along with a signature:

address Address of the contract itself
nonce Incrementing nonce
recipient Where swapped funds are sent
account Maker or Taker deposit address
asset 0x0 for Ether or a token address
amount Asset of the swapped amount
expiration Timestamp of expiration date of swap
relayerAddress Address of relayer
relayerAsset Asset to reward relayer
relayerAmount Amount of relayer reward
relayerExpiration A time period that the primary relayer gets (other relayers can publish after this)
preImageHash A hash of the preImage that will be revealed to settle the swap
signature the above variables are concatenated, hashed, and signed
preImage The random string that can be revealed along with the signature to process a swap

See the swap function in Metaswap.sol to see specifics on how this metatransaction is crafted.

Punishment for cheating

But there is an obvious way to cheat this system; either the maker or the taker can simply publish a bunch of metaswaps to themselves and drain their deposited funds before the legitimate buyer has chance to take out their side of the swap.

There is a simple way to make cheating a lot more difficult - by having a rate limit. If either side publishes too many metatransactions, then they will lose all of their funds. The current implementation of this rate limit is based on a proportion of the available funds. The default setting for this demo is 20% -- if one side tries to cheat, he will need to cheat more than 5 parties simultaneously to make a profit, and even this is not guaranteed.

This is what is meant by "economically-trustless"; if a side cheats, they risk losing their entire deposit.

This rate limit approach is pretty basic, and can certainly be improved in future versions. It could rate limit by transaction number, and/or other parameters to make the possibility of cheating nearly zero; another mechanism could be submit a proof of fraud to cancel the opposite side of the swap.

Improvements for future versions

The existing version of MetaSwap is an absolute minimal proof of concept that demonstrates a happy-path scenario. There are various improvements that could be made to improve this MetaSwap reference implementation and/or additional layers to this ecosystem.

More documentation once some things are finalised
Good quality code and testing
Validation to prevent every edge case
Dedicated signalling server
Add additional networks; Ethereum, Etheruem Classic, Rootstock, Tron, etc.
Better punishment systems
Ability to submit a proof of fraud to cancel the opposite side of the swap
Relayer commitments and punishment for not relaying
Integration with relay pools such as GTN
Explore integrating liquidity pools such as Uniswap
Alternative communication between peers (not just WebRTC/peer.js, maybe whisper?)

License

The contents of this repo (both app and contracts) are made available under the MIT License.

License

savageops/MetaSwap

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