4️⃣-Swap Protocol

Overview

Once an order match is found in the taker’s order book, the swap protocol should be initiated. The current swap protocol assumes that the taker and maker are connected via a payment channel network (e.g. Lightning or Connext) with sufficient balance available for the swap. The following is the swap protocol's "happy" flow:

1. Taker finds a match, e.g. buying 1 BTC for 10k DAI

2. Taker creates the private r_preimage and the public r_hash for the atomic swap

3. Taker sends the SwapRequest message to the maker, which includes r_hash

4. Maker confirms full or partial quantity in the SwapAccepted message

5. Taker starts the swap by dispatching the first-leg HTLCs on the DAI payment channel to the maker end, using r_hash

6. Maker listens for an incoming HTLC on the DAI payment channel. Once it arrives he verifies price and quantity and then dispatches the second-leg HTLCs on the BTC payment channel to the taker end.

7. Taker listens for an incoming HTLC on the BTC payment channel. Once it arrives he releases r_preimage. This allows both the taker and the maker payments to finalize.

8. Both nodes locally mark the swap as completed once the respective HTLC is resolved and the payment is finalized.

Possible misbehaviors and their outcome:

Misbehavior	Outcome	Effect on payment channels
Maker doesn't respond to the SwapRequest message	Taker should timeout the swap and penalize the maker	None
Taker doesn't start the swap after receiving the SwapAccepted message	Maker should timeout the swap and penalize the taker	None
Maker receives the first-leg HTLC with insufficient amount or incorrect CLTV delta	Maker should send the taker a SwapError message	Taker funds are locked until HTLC expiration
Maker doesn't continue the swap after receiving the first-leg HTLC	Taker should timeout the swap and penalize the maker	Taker funds are locked until HTLC expiration
Taker receives the second-leg HTLC with insufficient amount or incorrect CLTV delta	Taker should sends the maker a SwapError message	Both Taker and Maker funds are locked until HTLC expiration
Taker doesn't release r_preimage after receiving the second-leg HTLC	Maker should timeout the swap and penalize the taker	Both Taker and Maker funds are locked until HTLC expiration

Swap Protocol

SwapRequest Message (0x0c)

`string id = 1`
The message's globally unique identifier, generated by the sender 

`uint64 proposed_quantity = 2`
The proposed quantity

`string pair_id = 3`
The trading pair for the swap

`string order_id = 4`
The unique identifier of the maker order

`string r_hash = 5`
The taker preimage hash (in hex)

`uint32 taker_cltv_delta = 6`
The CLTV delta from the current height that should be used to set the timelock for the final hop when sending to the taker

The SwapRequest message is sent by the taker to the maker to start the swap negotiation.

SwapAccepted Message (0x0d)

`string id = 1`
The message's globally unique identifier, generated by the sender 

`uint64 req_id = 2`
The id from the received SwapRequest message

`string r_hash = 3`
The taker’s preimage hash (in hex) from the received SwapRequest message

`string quantity = 4`
The accepted quantity (which may be less than the proposed quantity)

`uint32 maker_cltv_delta = 5`
The CLTV delta from the current height that should be used to set the timelock for the final hop when sending to the maker

The SwapAccepted message is sent by the maker to the taker to accept the swap request.

SwapFailed Message (0x0f)

`string id = 1`
The message's globally unique identifier, generated by the sender 

`uint64 req_id = 2`
An optional id from the received SwapRequest message. Otherwise, this field is empty

`string r_hash = 3`
The taker’s preimage hash (in hex)

`string error_message = 4`
Additional information regarding the failure reason

`uint32 failure_reason = 5`
The failure reason

The SwapFailed message can be sent by either side of the swap protocol, at any time, to announce the swap termination.

failure_reason is an optional parameter for specifying the failure reason:

Failure Reason	Meaning	Description
0x00	Order Not Found	Could not find the order specified by a swap request
0x01	Order On Hold	The order specified by a swap request is on hold for a different ongoing swap
0x02	Invalid Swap Request	The swap request contained invalid data
0x03	Swap Client Not Setup	We are not connected to both swap clients, or we are missing public key identifiers for the peer's nodes
0x04	No Route Found	Could not find a route to complete the swap
0x05	Unexpected Client Error	A swap client call failed for an unexpected reason
0x06	Invalid Swap Message Received	Received a swap message with invalid data
0x07	Send Payment Failure	The call to send payment failed
0x08	Invalid Resolve Request	The swap resolver request was invalid
0x09	Payment Hash Reuse	The swap request attempts to reuse a payment hash
0x0a	Swap Timed Out	The swap timed out while we were waiting for it to complete execution
0x0b	Deal Timed Out	The deal timed out while we were waiting for the peer to respond to our swap request
0x0c	Unknown Error	The swap failed due to an unrecognized error