Locked Payment Channels for Secure Blockchain Token Exchange
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Solution Overview
Problem
Existing blockchain-based digital asset exchanges are vulnerable to security breaches, leading to asset theft and challenges in tracking ownership, integrity, and transfer history, with compromised platforms affecting user assets and eroding transparency and auditability.
Innovation Solution
Implementing a platform that facilitates secure digital asset transfers through locked payment channels and multi-party atomic swaps, ensuring user assets are not compromised even if the platform is hacked, with mechanisms for fairness and improved auditability.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If users' assets are stored in a common pool at the exchange, then the exchange can facilitate trading operations, but the exchange becomes vulnerable to security breaches and asset theft
Solution Approach 1:
The patent segments the common pool storage model into individual user asset storage. Each user's assets remain in their own custody wallet rather than being pooled together, creating isolated security boundaries that prevent systemic risk propagation while maintaining trading functionality through smart contract-based exchange mechanisms
Solution Approach 2:
The patent introduces smart contracts as intermediaries that facilitate trading between users without requiring direct asset pooling. The smart contracts act as neutral mediators that can match orders and execute trades while keeping user assets secured in their respective wallets, eliminating the need for a centralized vulnerable pool
2Productivity
If assets are pooled into a common storage facility, then trading efficiency is improved, but tracking individual assets and proving ownership becomes more challenging
Solution Approach 1:
The patent implements comprehensive audit trail mechanisms that provide continuous feedback on asset movements. Every transaction is recorded with immutable proof of ownership and transfer history, allowing real-time tracking of individual assets while maintaining trading efficiency through automated smart contract execution
Solution Approach 2:
The patent creates cryptographic copies and proofs of asset ownership and transfer history that can be verified without exposing the actual assets to a common pool. These digital proofs enable traceability and auditability while assets remain segregated in individual user wallets
3Reliability
If the exchange platform is compromised, then platform operations are affected, but user assets should remain secure
Solution Approach 1:
The patent extracts user assets from the exchange platform's control and places them in user-custodied wallets. This separation removes the vulnerability vector where platform compromise could lead to asset theft, as the exchange only holds minimal operational funds while user assets remain independently secured
Solution Approach 2:
The patent implements preliminary security measures through smart contracts that prevent platform compromise from affecting user assets. The system is designed with built-in countermeasures where user withdrawals and asset protection are automatically enforced through cryptographic controls, creating preliminary defenses against potential platform vulnerabilities
Data Source
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Figure 3A~3B
AI summary
Embodiments of the disclosure provide solutions for facilitating exchanges of blockchain tokens between users. In a preferred embodiment a computing platform is provided which matches exchange-related instructions (orders) that are received from respective users. Each user establishes at least one payment channel with the platform and funds it with tokens of the type specified in their exchange-related instructions. When matching instructions are identified by the platform, the exchange is performed via the payment channels. A multi-party atomic swap can be used for implementing the token exchange, in which spending of a first transaction reveals a secret that can be used to spend a further transaction.