Stellar Community Fund

By Perun State Channels

Perun Cross-Chain Swaps

SCF #24

$90.0K

Legacy v5.0 Community Award

Awarded

Perun Cross-Chain Swaps enables fast and secure asset swaps between Stellar and Ethereum and more ecosystems in the future.

Products & Services

We apply for the SCF #24 Community award to provide Stellar users cross-chain swaps between Stellar and Ethereum and more ecosystems in a later stage. For this goal, we will extend our Perun State Channel infrastructure that we have developed during SCF #14. The overview for the completed SCF #14 Grant can be found here. Upon completing the Grant, Stellar and Ethereum users will be able to swap assets between Stellar and Ethereum, using our Perun X dApp. The dApp currently allows end-users to exchange assets between Ethereum chains and is currently deployed on Mainnet on Ethereum and iExec’s Bellecour. It will be extended to include cross-chain swaps for other blockchains as well, such as Polkadot, Internet Computer, Cardano, Cosmos and Nervos for which we have already developed the technical foundation. The diagram below shows our PerunX architecture. The users will be able to request swaps via the Perun X frontend, and deploy the exchanged asset into a liquidity pool on the source chain. On the target chain, the desired asset from the target chain will be withdrawn from a liquidity pool. This product will have a significant impact on the Stellar ecosystem, as it provides a direct gateway between both chain ecosystems with a seamless user interface. Our exchange infrastructure utilizes liquidity pools. Thus, the swapped asset is deposited into a pool on the source chain, and the received asset is withdrawn from another liquidity pool on the target chain. Sustainable revenue can be achieved by charging a fee for the cross-chain swap service. Our liquidity pool infrastructure can be extended by DeFi-based building blocks. This allows us to incentivize liquidity providers to earn exchange fees from cross-chain swaps. Therefore, we believe that our platform will facilitate growth of the DeFi segment within the Stellar ecosystem. To allow cross-chain swaps between Stellar and Ethereum, we will adapt the cryptography components within the Stellar payment channel infrastructure (on-chain and off-chain) to comply with the ones used for Ethereum payment channels. Also, our core Perun module currently has only support for channels between same-type blockchains (i.e. Mainchain and sidechain). Therefore it has to be extended to support swaps between two different types of chains (i.e. Ethereum and Stellar). Our exchange platform has to be extended to support exchange requests from Stellar users. The frontend will be extended to use the Freighter Web Wallet to sign Stellar transactions. The complete technical description of the proposed work can be found here.

Requested Budget

$90.0K

Team

The PolyCrypt GmbH is a spin-off of the Technical University of Darmstadt, Germany. The team has extensive experience in applied cryptography and blockchain research as well as in software development. Core areas for our team include the research and development of interoperability and scalability solutions. In addition, our team members are the main developers of the Open-Source go-perun library and therefore provide over 5 years of experience specifically in developing software in the blockchain space.

We have successfully built the Perun Channels SDK on Stellar during SCF#14 enabling developers to utilize Payment Channels for their applications. In SCF#24 we have successfully built and deployed a cross-chain swapping solution between Stellar and Ethereum.