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PSBT Marketplace

The VladSwap marketplace is built around the concept of Partially Signed Bitcoin Transactions (PSBTs). This allows for the creation of a trustless and decentralized order book, where users can trade Bitcoin-based assets without having to rely on a centralized exchange.

What is a PSBT?​

A Partially Signed Bitcoin Transaction (PSBT) is a standard format for representing a Bitcoin transaction that has not yet been fully signed. It contains all of the information about the transaction, including the inputs, outputs, and witness data, but it does not yet have all of the required signatures.

This allows for a number of interesting use cases, including:

  • Multi-signature wallets: Multiple parties can sign a transaction without having to be online at the same time.
  • Offline signing: Transactions can be created on an online machine and then signed on an offline machine for added security.
  • Atomic swaps: Two parties can trade two different assets in a single, all-or-nothing transaction.

How VladSwap Uses PSBTs​

VladSwap uses PSBTs to enable trustless atomic swaps between Bitcoin and other assets, such as Alkanes. Here's how it works:

  1. Order Creation: A user creates a PSBT that represents their side of the trade. For example, if a user wants to sell 1 BTC for 100 Alkanes, they would create a PSBT that sends 1 BTC to a specific address and requires a corresponding input of 100 Alkanes.
  2. Order Propagation: The PSBT is broadcast to the subp2p network, where it is validated and added to the distributed order book.
  3. Order Matching: Other users can discover the order and, if they agree to the terms, create their own corresponding PSBT to complete the trade.
  4. Atomic Swap: The two PSBTs are combined and broadcast to the Bitcoin network, where the atomic swap is executed in a single transaction.

Because the two transactions are combined into a single atomic swap, there is no risk of one party failing to uphold their end of the bargain. If either party fails to provide their signature, the entire transaction is voided and no funds are exchanged.