Ensuring Secure and Efficient Cross-Chain Option Transfers

Table of Links

1. Abstract and Introduction

2. Preliminaries

3. Overview

4. Protocol

   4.1 Efficient Option Transfer Protocol

   4.2 Holder Collateral-Free Cross-Chain Options

5. Security Analysis

   5.1 Option Transfer Properties

   5.2 Option Properties

6. Implementation

7. Related Work

8. Conclusion and Discussion, and References

A. Codes

• A.1 Robust and Efficient Transfer Protocol
• A.2 Holder Collateral-Free Cross-Chain Options

B. Proofs

• B.1 Transfer Protocol Proofs
• B.2 Option

5 SECURITY ANALYSIS

We analyze and prove the properties satisfied by our proposed protocol. Recall from the previous illustration that Alice/Carol is called the holder, and Bob/Dave is the writer, and Carol or Dave is required to pay a transfer fee to the corresponding seller. The payment 𝑃 is called the premium. 𝐴𝑠𝑠𝑒𝑡𝐺 deposited by Bob is called guarantee. transfer fee or any other asset escrowed in contracts are referred to as collateral.

5.1 Option Transfer Properties

There are two fundamental properties that must be satisfied during the option transfer process.

• Safety (No Underwater): A compliant party must not lose any collateral/position during the transfer process without acquiring an corresponding collateral/position.

• Liveness: During the transfer of the holder or writer position, if all parties are conforming, the holder or writer will correctly transfer to the buyer, and the holder or writer will receive the correct transfer fee.

Theorem 1. Protocol 4.2.1 satisfies safety (no-underwater):

• If Alice is conforming and loses her position, then she will obtain either Carol’s collateral, Bob’s collateral and guarantee, or both.

• If Bob is conforming and loses his position, then he will obtain Dave’s collateral.

• If Carol is conforming and loses her collateral, then Carol will obtain the holder position of the option.

• If Dave is conforming and loses his collateral, then Dave will obtain the writer position of the option.

Proof. See Details in Appendix Section B.1.1.

Theorem 2. Protocol 4.2.1 satisfies liveness: If Alice, Bob, and Carol/Dave are conforming, then Alice/Bob will obtain Carol/Dave’s collateral, Carol/Dave will obtain Alice/Bob’s position, and Bob/Alice will retain their original position.

Theorem 1 guarantees that an honest party will not incur losses in the transfer protocol, even if another party irrationally forfeits their assets, thus protecting the interests of contract adherents. We list theorems related to other properties, with proofs in Appendix B.1. Theorem 2 ensures that if the transfer proceeds correctly, all participants receive the intended outcomes.

Three properties must be ensured during the transfer process: Unobstructibility, Independence, and Isolation. First, external interferences cannot disrupt the transfer by the conforming parties. Second, after a successful transfer, the holder or writer is updated to another party, ensuring that the transfer does not affect future transactions. Finally, the transfer process for the holder and the writer must be isolated, with no mutual influence.

• Unobstructibility: If both the buyer and the seller are conforming parties, no other party can obstruct the transfer process.

• Independence: After a successful transfer, subsequent transfers can proceed normally, and the previous position holder cannot interfere with future transfers.

• Isolation: The processes of transferring options by the holder and the writer to other buyers can occur simultaneously and separately, without interference from each other.

Theorem 3. Protocol 4.2.1 satisfies unobstructibility: Alice/Bob can transfer the position to another party even if Bob/Alice is adversarial.

Theorem 5. Protocol 4.2.2 satisfies isolation: Alice and Bob can simultaneously and separately transfer their positions to Carol and Dave, respectively. This means that transferring holder and the transferring writer can proceed concurrently.