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Atomic Swap with UTXO Support

With the new attach and detach functionalities which allow you to attach and detach assets from a UTXO, it is now possible to do Atomic Swaps like Ordinals.

This guide details the different steps from opening a sell order to executing the buy order using Bitcoin Core for examples.

Step 1: Generation of a PSBT by the seller

After attaching assets to the UTXO $UTXO_TXID:$UTXO_VOUT, the seller $SELLER_ADDRESS can decide to sell them at the price $PRICE_BTC. To do this, he must first prepare a “sale order” in the form of a signed PSBT:

Creation of the PSBT $SELLER_PSBT

$ bitcoin-cli createpsbt '[{"txid":"$UTXO_TXID", "vout":"$UTXO_VOUT"}]' \
'[{"$SELLER_ADDRESS": "$PRICE_BTC"}]'

Signature of PSBT

$ bitcoin-cli walletprocesspsbt $SELLER_PSBT

Step 2: Dissemination of the PSBT

The seller can then share the PSBT in the way that seems most appropriate to him.

Step 3: Generation of a PSBT by the buyer

Once collected by a potential buyer, he creates a PSBT with the inputs of the sum necessary to pay for the assets and an output for the exchange.

After having determined the list of UTXOs with the listunspent command, calculated the exchange $CHANGE and the fees, the buyer $BUYER_ADDRESScan create his PSBT $BUYER_PSBT:

$ bitcoin-cli createpsbt '[{"txid":"$UTXO1_TXID", "vout":"$UTXO2_VOUT"}, …]' \
'[{"$BUYER_ADDRESS": "$CHANGE"}]'

Step 4: Joining the PSBTs of the seller and the buyer

We must now join the two PSBTs into a single PSBT $PSBT_FINAL with the joinpsbts function.

Attention: the joinpsbts function mixes the inputs and outputs randomly, you must therefore repeat the operation until the first output belongs to the buyer. Indeed, it is always the first non-OP_RETURN output which is the destination of the atomic swap.

$ bitcoin-cli joinpsbts '["$BUYER_PSBT", "$SELLER_PSBT"]'

Step 5: Signature, finalization and broadcast of the transaction

Signature of $PSBT_FINAL

$ bitcoin-cli walletprocesspsbt $PSBT_FINAL

Then finalizing $SIGNED_PSBT_FINAL

$ bitcoin-cli finalizepsbt $SIGNED_PSBT_FINAL

And finally broadcast of the transaction

$ bitcoin-cli sendrawtransaction $RAWTRANSACTION

Include a Counterparty transaction

It is possible to include a Counterparty transaction inside the transaction used to finalize the atomic swap. For this it is enough:

  1. use the composition API with the return_data_only argument

  2. Add the CNTRPTY prefix

  3. Encrypt with ARC4 using the txid of the first input of the transaction

  4. Use the $DATA obtained in “Step 3: Generation of a PSBT by the buyer”

    $ bitcoin-cli createpsbt '[{"txid":"$UTXO1_TXID", "vout":"$UTXO2_VOUT"}, …]' \
    '[{"$BUYER_ADDRESS": "$CHANGE"}, {"data": "$DATA"}]'

  5. In “Step 4: Joining the PSBTs of the seller and the buyer” ensure that:

    1. The first input belongs to the buyer
    2. The first output is the OP_RETURN
    3. The second output is to the buyer

Attention: this only works with an OP_RETURN, the size of $DATA must therefore not exceed 80 bytes.