On the XDC blockchain, cryptocurrencies (XRC-20 tokens) can be exchanged using the peer-to-peer XRC-Swap. In order to promote censorship resistance, security, and self-custody, the protocol is built as a collection of persistent, non-upgradable smart contracts. It is also intended to operate without the use of any trusted intermediaries who might arbitrarily impose access restrictions.
The XRC-Swap is currently open source and MIT-licensed. Once implemented, XRC-Swap in any version will always be operational with 100% uptime as long as the XDC blockchain is active.
How does a normal market compare to XRC-Swap?
It is helpful to first consider two topics: how the automated market maker design differs from conventional central limit order book-based exchanges, and how permissionless systems differ from traditional permissioned systems, in order to understand how XRC-Swap differs from a traditional exchange.
The majority of openly accessible markets employ a central limit order book method of trading, in which buyers and sellers create orders arranged by price level that are gradually filled as demand changes. A system known as an order book will be familiar to everyone who has traded equities through brokerage houses.
Instead of employing an order book, the XRC-Swap employs an automated market maker (AMM), also known as a constant function market maker.
At a very high level, an AMM substitutes a liquidity pool of two assets that are both valued in relation to one another for the buy and sell orders in an order book market. The relative prices of the two assets change as they are exchanged, and a new market rate for each is established. Instead of dealing with specific orders placed by different parties, a buyer or seller in this dynamic deals directly with the pool. A rising number of parties are actively researching the advantages and downsides of automated market makers compared to their traditional order book counterparts. On our study page, we've compiled a few noteworthy cases.
The immutable and permissionless XRC-Swap is the second departure from conventional markets. The fundamental principles of XDC and our dedication to the ideals of permissionless access and immutability as essential elements of a future in which anyone in the world can access financial services without concern for discrimination or counter-party risk served as the inspiration for these design choices.
The services provided by a protocol with a permissionless architecture cannot be selectively restricted as to who may or may not use them. Anyone may freely trade, offer liquidity, or establish new markets. Traditional financial services usually limit access depending on a person's location, level of income, and age.
Additionally, the protocol is immutable, meaning it cannot be upgraded. No party is permitted to reverse trade execution, pause contracts, or otherwise alter the protocol's behavior in any manner.
On the XDC blockchain, cryptocurrencies (XRC-20 tokens) can be exchanged using the peer-to-peer XRC-Swap. The protocol is built as a collection of persistent, non-upgradable smart contracts. It is intended to operate without the use of any trusted intermediaries. An automated market maker (AMM) is a departure from the traditional order book market. Instead of dealing with specific orders placed by different parties, a buyer or seller deals directly with a pool of assets.