Privacy-Preserving Decentralized Cryptocurrency Exchange without Price Manipulation

Abstract

Existing centralized cryptocurrency exchanges designed as trusted central entities are vulnerable to theft of funds, while decentralized exchanges that make all orders public are vulnerable to price manipulation, such as frontrunning attacks. To overcome the flaws, we propose a secure decentralized exchange that supports matching trade orders and atomic cross-chain settlements, and facilitates price discovery. The order matching protocol achieves privacy-preserving yet efficient design by using secure multi-party computation and a trusted execution environment. The atomic cross-chain settlement protocol based on adaptor signatures reduces the number of on-chain transactions while retaining the desirable properties like confidentiality and indistinguishability of these transactions. Security and performance analysis illustrates that our exchange can help traders swap across different blockchains in a privacy-preserving manner without compromising efficiency.