ARWEN: Non-Custodial Cryptocurrency Trading Exchange Protocol?
ARWEN is a blockchain-based platform that seeks to solve the issue of security on crypto exchanges. The developers of the platform believe that blockchain technology incredible implications for value storage, asset ownership, and much more.
However, security remains one of the biggest threats to large-scale cryptocurrency adoption.
Both individual and institutional traders continue to fear to lose their funds due to exchange hacks. ARWEN believes that the ideal state of crypto trading should combine the best elements of centralization and decentralization.
While decentralized platforms provide superior security and custodianship, centralized exchanges remain the best source of market liquidity and volume. ARWEN seeks to initiate a decentralized security layer on centralized exchanges to eliminate the risk of losing funds through hacks.
How It Works
ARWEN is a more secure platform with your coins moving from your wallet into a blockchain-based escrow instead of an exchange wallet. Even if you trade on an exchange that is attacked or prone to malicious behavior, your funds remain safe.
All the same, it’s important to note that ARWEN is not an exchange—centralized or decentralized. It provides the technology to exchanges, which are still the best providers of market liquidity. As a trader, you can still access the full order book of the exchange; the exchange can still match your orders as usual, and you don’t need to seek counterparty as you would on a decentralized exchange.
ARWEN is not a wallet, vault, or any form of long-term cryptocurrency storage. However, the technology it offers creates a secure channel between the trader’s wallet and the exchange, especially when trading with a particular exchange. It does not hold your keys or your coins. ARWEN currently collaborates with KuCoin.
Who Provides The Escrow?
In traditional arrangements, a trusted third party or “escrow agent” holds assets in custody and releases the funds once the involved parties meet certain conditions. ARWEN uses blockchain technology to hold the funds between traders and the exchange.
For traders using BTC or LTC, the ARWEN system creates smart contracts on those blockchains to hold funds while they trade, then returns the funds directly to their wallet once they close the escrows.
Eliminate Counterparty Risk
Hackers continue to target centralized exchanges, putting traders’ coins at risk. ARWEN’s technology combines on-blockchain escrows and off-blockchain atomic swaps, which means that traders never deposit their coins in a centralized exchange’s wallet.
Traders can, therefore, trade safely on the exchange with peace of mind as blockchain safeguards their funds.
Fast, Secure Atomic Swap Protocol
With ARWEN, traders need not compromise on speed or liquidity. They can access liquid markets through a centralized exchange and use ARWEN to trade with much greater security.
ARWEN’s layer 2 Protocol facilitates trades using atomic swaps, cryptographically secure and simultaneous exchange of coins across blockchains. Trades are only visible to the traders and the exchange.
Compatible With Any Custody Solution
Traders can store their cryptocurrency anywhere. They can use a third-party custodian, desktop, online, mobile, or hardware wallet.
Blockchain-based escrows are funded directly from a chosen custody solution. Coins remain secure while owners trade and finally return to their custody solution when they close out their ARWEN escrows.