AN OPEN-SOURCE PROJECT CONNECTING DIGITAL ASSET EXCHANGES

WHITE PAPER

Content

Abstract

Our Vision

Technical Concepts

The Exchange Union Daemon

Key Technologies

Trade Architecture

Industry Benefits

The XUC Token

Incentives and Rewards

Token Information

Roadmap

Join us

1

2

3

3

4

5

6

7

7

8

9

10

Abstract

1

The digital asset marketplace is growing exponentially, but it lacks the necessary infrastructure to support consistent growth. For the foreseeable future, this growth is predicted to gain momentum as more traders, investors, and institutions embrace decentralized digital assets. Currently, there are numerous pain points which influence market adoption and sustainable growth in the ecosystem, but the most predominant issue is the lack of liquidity amongst digital asset exchanges.

Due to inconsistencies in market regulations around the world, exchanges are often restricted to localized regions and isolated markets. Various geographical and geopolitical barriers make it difficult for digital assets to be readily available across borders, resulting in stagnant pools of liquidity which drive regional price discrepancies. Each exchange is thus an isolated market in itself, greatly inconveniencing both exchanges and traders alike.

Europe

49Asia

38North America

17

South America

19

Africa

4

Oceania

10

2

Our Vision

In the ideal digital asset economy, traders would be able to buy and sell assets from any exchange, at the best market price, irrespective of location. This is the paradigm shift Exchange Union is ushering in.

The mission is to improve liquidity mechanics by building the key infrastructure to connect digital asset exchanges around the world.

Exchange Union is taking an unparalleled approach to reducing friction and inefficiencies in the ecosystem. The aim is to bring digital asset exchanges worldwide onto a single decentralized network, creating a highly liquid environment reducing market volatility and price manipulation. Such a network of exchanges is conducive to healthy market competition and will open the door for mainstream adoption.

3

The Exchange Union Daemon, or XUD, is an open-source node software and is fully accessible via Exchange Union's GitHub repository. XUD is a first-of-its-kind technology designed to make trading secure, instant, and trustless. It is a hybrid of open-source protocols such as the Lightning and Raiden Networks, various full-node daemons, and other specifically designed systems to match orders and facilitate trades between exchanges on the network.

Technical Concepts

The Exchange Union Daemon is comprised of three cutting-edge blockchain technologies – Atomic Swaps, Payment Channels, and Decentralized Orderbooks. XUD nodes are operated by digital asset exchanges and can support any token or blockchain with payment channel technology.

Exchanges, brokers, and liquidity providers will operate XUD independently through an API integration. However, the majority of traders will access the network through the UI of their favored exchange.

See our technical paper for additional information on how XUD differs from its competitors.

The Exchange Union Daemon

4

Technical Concepts Key Technologies

Atomic Swaps use Hashed Timelocked Contracts (HTLCs) to ensure that either the trade occurs in full or it does not occur at all. This functionality guarantees that no party is left without a payment being made, giving Exchange Union its trustless characteristic. Two parties can trade without trusting each other. Atomic swaps on payment channels are relatively uncharted territory, which has given Exchange Union a head start in testing and implementing this combination of protocols.

Payment channels are the common term for Layer 2 protocols such as the Lightning and Raiden Networks. Primarily known as one of several blockchain scaling solutions, payment channels allow for digital assets to be transferred instantly, limited only by network latency and bandwidth. Two parties open a channel with one another and send assets back and forth in real time without the need to constantly update balances on the underlying blockchain.

The XUD tech stack revolves around three primary technologies.

Atomic Swaps

Payment Channels

Decentralized Order Book (DOB)

Exchange Union's DOB takes a different approach from most, if not all, order book systems in existence today. Order book propagation and matching will take place in a full mesh network and will remain completely decentralized amongst participants in the network, while maintaining integrity to resist manipulation and censorship. Specific techniques and strategies to fight bad actors in the network can be found in the technical paper.

5

Trade Architecture

Sitting atop proven blockchains, such as Bitcoin and Ethereum, Exchange Union leverages Layer 2 payment channel technology enabling decentralized, instant, and trustless trades without compromising security.

Technical Concepts

Exchanges running an XUD node are

directly connected, enabling the

real-time sharing of order book

information in a decentralized

manner.

Once matching orders are found

across the network, the XUD will execute

the trade. In the above instance, two

participants are trading Litecoin and

Ethereum Classic.

An atomic swap binds the Litecoin

and Ethereum Classic to each other

cryptographically, ensuring that no

party is defrauded or left without

payment.

The assets are transferred

through their respective payment channels instantly

and trustlessly, completing the

transaction.

1 2 3 4

6

Industry Benefits

The Exchange Union platform enables exchanges to benefit from the security of a robust decentralized trading infrastructure. The transparent network punishes bad actors and eliminates market inefficiencies that exchanges and traders face today.

Exchanges in the network will see an influx of liquidity and boosted revenues as the result of an increased user base. Access to a combined orderbook will ensure visibility to all trading pairs on the network. Exchanges will not lose out on trading fees when a trade is matched on another exchange platform. Instead, exchanges stand to benefit from an increase in fee generation when they provide liquidity to other participants. Exchange Union will never take any fee from a transaction, and is designed to eliminate any middleman.

Traders will benefit from tighter spreads, better market prices, more trading pairs, all without the need to register for multiple accounts across different exchanges. Traders can access these benefits by simply using their preferred exchange within the union, saving time and resources when sending funds across networks.

Exchange Union’s highly liquid and efficient ecosystem will significantly reduce the likelihood of market manipulation, price volatility, and a handful of adverse market effects by pooling resources together on a transparent decentralized network.

Advantages for end-users:

Advantages for Exchanges:

Larger user base

Robust decentralized trading infrastructure

Increased volume & earnings

Increased liquidity

Tighter spread

No need for multiple verified accounts

Best market price

More trading pairs

7

The XUC Token

XUC is the asset which powers and secures the Exchange Union network. It is an ERC20 utility token, designed to reward and incentivize many diverse functions in the network. Traders, exchanges, and developers all stand to benefit from its use.

The continuous reward generation from participants on the platform creates a steady flow of token circulation in the ecosystem. For example, exchanges will be required to stake the XUC token, thus discouraging and even punishing potential bad actors in the network, while being rewarded for providing liquidity. This unique model encourages the liquidity of digital assets, performance of exchanges, and trading efficiencies by incentivizing participation.

Incentives and Rewards

A clearly defined incentive structure is critical to the success of an open-source project. The following participants are rewarded:

Developers

For building, reviewing, testing, and maintaining XUD

Exchanges

For providing liquidity

Traders

For achieving specific trading volumes

XUD Service Providers

For running nodes, providing watchtower services, and more

8

Token Information

XUC has a total supply of 3,000,000,000. The business model of Exchange Union is tied to the value of the XUC token, making the project self-sustaining. XUC’s initial circulation was achieved through private placements without the need for an ICO. 10% of the token supply is allocated to the team, as seen in the chart below.

Exchanges Rewards33%

Team 10%

Presale & Private Placement

R&D

Promotion & Bug Bounties

Special Contributors

Incentive Reserve

Excess supply to be burned

Total Supply

2%

30%

5%

2%

3%

15%

3,000,000,000

Roadmap

Q3/2017

Project start

Q2/2018

Release of technical specifications, start of open-source development

Proof-of-concept implementation release

Test-net release

Main-net release

Q1/2019

Q2/2019

Q4/2018

9

Join us

As an open-source project, Exchange Union is continuously seeking interested developers to advance the XUD software. Both full-time developers and open-source contributors are encouraged to speak with the Exchange Union team on Gitter. Available tasks can be found tagged with an XUC bounty on Github.

Digital asset exchanges wishing to learn more about how the XUD API can be integrated into their current systems can contact Exchange Union here.

For those interested in the progress of Exchange Union, join the conversation on Twitter, Telegram, or LinkedIn.

10