Atomex team is keeping a close eye on the recent regulation turns in regard to the Tornado Cash sanctions. Under the current circumstances our top priority remains safe, secure and transparent service for users. So, in this special review of the atomic swaps technology we'll see how it can help to make the DeFis both innovative but comply with the new AML and the regulatory requirements.
The first obvious thing about atomic swaps is that they are actually "atomic". So, there are always two tightly coupled transactions: one "transaction in" on the first chain and one "transaction out" on the other blockchain. The link between these transactions is the secret hash which is used for both hash lock transactions. So cross-chain transactions performed through atomic swaps are not actually mixed or somehow obfuscated, and are still as traceable as ordinary DEX transactions.
# Atomex team's work on transparency
The only complicated thing to get the full transparency of cross-chain swaps performed on an atomic swap DEX is to find the corresponding paired transactions in two different chains. So, let's say you see a certain "transfer in" the Atomex DEX smart contract on Ethereum, now you want to find the paired "transfer out" on another chain, but the question is "on what chain?".
To resolve this difficulty, we made this work for ourselves. In the new version of Atomex API we implemented the swaps tracker. So, all the swaps' details are now available in JSON format on the opened endpoint. We are now working on making it available in the stats sections on the official website.
It is worth saying that Atomex DEX is not the same case as any custodial exchanges. So, all this swaps' data is just collected from the blockchain explorers as it is completely opened for everyone. We believe that on-chain transactions can have the same level of transparency regardless of whether they were carried out inside one or across two blockchains.
# Atomex implementation
In comparison with ordinary DEXs Atomex DEX has a centralized order matching engine. That's why we are very flexible for any new regulation circumstances. In today's case all traditional DEXs need to ban certain addresses on the frontend level, but all the DEX functionality is still available for the direct RPC interaction. In contrast to this Atomex DEX checks addresses on the matching level, which leaves no possibility for an improper use.
So, the hybrid architecture makes the Atomex DEX both useful for users who want to perform efficient cross-chain conversion operations but useless for those who want to use Atomex for funds obfuscation or any other inappropriate actions.
# What actions did Atomex take?
In the response to the OFAC's sanctions decision on Tornado Cash, Atomex forensic system was set up to identify all wallets that have interacted with Tornado Cash contracts post-sanctions. These wallet holders may experience issues while using the DEX functionality. As any forensic involves a probabilistic logic, some addresses may not be allowed to DEX functionality by mistake. We are doing our best to minimize such incidents. Despite this the non-custodial Atomex wallet remains fully available for any addresses.
As a team we keep being engaged and open for any collaborations that can help to build fair, innovative and safe finance. And also, we are looking forward to a constructive collaboration between the whole crypto community and the regulatory authorities. We believe that only joint efforts can lead to real mass adoption and technology progress.