lightning trades on the hodlhodl testnetlightning trades on the hodlhodl testnet
A couple days ago, hodlhodl announced that they have added lightning trading to their testnet (https://hhtestnet.com/):
Here's how they say they are using arkade:
The way we are working to solve the issue is by leveraging a Taproot-based escrow multisig on Arkade. From a user perspective it is a simple trade between Lightning and fiat.
What happens on the backend is a non-custodial atomic swap by Satora, from Lightning to Arkade when a seller deposits bitcoin. The BTC lands into a multisignature wallet with the keys distributed amongst 4 parties (buyer, seller, Hodl Hodl and the Arkade operator).
Similar to onchain 2/3 multisig wallets, bitcoin is held in a non-custodial way until the buyer completes their part of the trade and the seller confirms the receipt of the funds.
After the confirmation, bitcoin is released to the buyer and they can choose to receive it as BTC on Lightning. The complexity of a swap and key management will be obscured from the user making the flow seamless and non-custodial at the same time.
Why not just use lightning?Why not just use lightning?
I believe they are relying on arkade because it is difficult to create a non-custodial escrow structure with lightning.
Back in 2021/2022, some PlebLab folks were working on a lightning escrow project (#6154, #7146, #54479), but I don't think it is alive anymore.
It seems like there are some escrow constructions you can make for lightning involving hodl invoices, but hodl invoices have mixed popularity because they lock up liquidity along the whole path.
So my guess is that hodlhodl is relying on arkade to let them do a more traditional escrow contract via multisigs rather than try to work around the dynamic of channels and liquidity in lightning.
What is Satora?What is Satora?
Satora has come across my radar a couple times in the last week.
Satora does swaps (apparently they used to be Lendaswap?) between bitcoin and some of the shitcoins, but also between lightning and arkade.
Satora Swaps (formerly LendaSwap) enables instant, trustless swaps between Bitcoin (via Lightning, Arkade, or on-chain) and EVM tokens on Polygon, Ethereum, and Arbitrum.
I need to look into them further, but I'm not sure that I'm curious enough to do it at the moment.
Curious how this differs from RailsX The Amboss ln trading platform.
I think they use TapAss
https://twiiit.com/hodlhodl/status/2054184700738990374
The 4-party multisig still requires the Arkade operator to cooperate for every release. Test what happens if that key is unavailable during settlement.
Interesting to watch Ark get its first real stress test through actual trade volume rather than demos. The UX gap between 'this works in a test' and 'this works when a trade is pending and someone's anxious' is where these protocols either earn trust or lose it. Would love to see hodlhodl publish even rough latency and failure rate data from early trades.