Title: Limitations of Atomic Swap in Cross-Chain Transactions: Exploring the Feasibility of a PTLC-Based Swap

Abstract

Atomic swaps are a key technology that enables seamless exchange of assets between different blockchain networks. However, the integration of PTLC-based (PTLC) cryptocurrency schemes with atomic swaps has raised concerns about their compatibility with some networks, such as Ethereum. The purpose of this paper is to investigate whether there are PTLC-based swap opportunities for Ethereum.

Introduction

Cross-chain atomic swaps have attracted a lot of attention in recent years due to their potential to facilitate efficient transfer of assets between different blockchain networks. Purpose-built PTLC systems offer a unique approach to atomic swaps by using permutation and transformation techniques to transform one cryptocurrency into another. Despite its promising nature, concerns have been raised about the compatibility of PTLC-based exchange mechanisms with some Ethereum-compatible cryptocurrencies.

Background

PTLC is a type of cryptocurrency that uses advanced cryptographic techniques to enable secure and efficient cross-chain transactions. Using permutation and transformation methods, PTLC schemes can convert one cryptocurrency into another, thereby facilitating atomic exchanges between different blockchain networks. For example, PTLC-based swap systems can be used to convert Bitcoin (BTC) to Ethereum Classic (ETC) and vice versa.

Ethereum Token Economy

Ethereum is a platform that supports a wide range of tokens, including ERC-20 and ERC-721 assets. The token economy within Ethereum aims to enable the creation, distribution, and trading of these digital assets. However, when PTLC-based exchange capabilities are involved, the Ethereum token economy becomes a hindrance.

Theoretical Limitations

To test whether PTLC-based data exchange is possible on Ethereum, we need to analyze the theoretical limitations of this technology. From a cryptographic perspective, PTLC schemes rely on specific permutation and transformation rules that are not guaranteed to be compatible with the Ethereum token economy. This is because the Ethereum blockchain has undergone significant changes since the introduction of PTLC schemes, which introduced new cryptographic primitives and mechanisms.

Conclusion

In conclusion, while it is theoretically possible to create a PTLC-based exchange, it may not be feasible on Ethereum due to the complex token economy and incompatible underlying cryptographic mechanisms. To fully realize the potential of PTLC-based swaps on Ethereum, further research is needed to determine whether these schemes can be adapted to operate within the current network architecture.

Directions for Future Research

To address this knowledge gap, future research should focus on the following:

• Exploring new permutation and transformation rules that are compatible with the Ethereum token economy.

• Investigating alternative PTLC-based exchange architectures that could meet the specific requirements of Ethereum.

• Developing a deeper understanding of the cryptographic mechanisms underlying PTLC schemes to better understand their limitations.

Limitations and Open Questions

While this study has demonstrated theoretical limitations to the feasibility of PTLC-based exchanges on Ethereum, several open questions remain:

• How do existing PTLC schemes adapt to the complex Ethereum token economy?

• What are the implications of these adaptations for PTLC-based swaps?

• Are there alternative solutions that can overcome the limitations of PTLC schemes on Ethereum?

By answering these questions and exploring further avenues of research, we can better understand the capabilities of a PTLC-based exchange on Ethereum and realize its full potential.