The Nash Exchange dispatched on mainnet on 9 September 2019. This initial version of their product proved the viability of their core technology. This was the first time in the crypto space that high-performance markets with order books were implemented directly across different blockchains. This made it possible for traders to trade crypto directly on an exchange without losing custody.
The exchange comes with a number of unique features:
Decentralized API keys
Enterprise traders who rely on algorithms and API keys to place orders are a big target for Nash. Nash implemented decentralized API keys based on secure multi-party computation (MPC) that provides a non-custodial environment which is a basic requirement when trying to offer the kind of security protection wished for by institutional traders.
Decentralized exchanges normally sign blockchain transactions with a user’s private key. This is a big disadvantage as it allows access to all the assets in an account, with one single key. Even with the generation of individual API keys, centralized exchanges still remain custodial.
MPC allows for the split of the generation of a blockchain signature between Nash and the user. The transaction cannot be signed by either of the parties alone. Additionally, the user can clearly state provisions for each API key e.g address whitelist. A security policy can then be enforced by Nash: any withdrawal to an address not on the whitelist will be revoked by Nash.
API keys function similarly to those of a centralized exchange only that Nash does not take custody of users’ assets. This simply means that even if both traders’ and Nash’s servers are compromised, funds are not at risk.
Non-custodial Bitcoin Order Books
Bitcoin integration into the Nash state channel system was Nash’s goal from the beginning. This was eventually realized by the team in May 2020.
Cryptocurrency traders have always had to forfeit security and custody over their assets when trading on centralized exchanges. Bitcoin particularly has demonstrated to be challenging when it comes to integration on decentralized exchanges. This is because Bitcoin doesn't offer full smart contract support.
"Token wrapping" has been used in some exchanges. This is where decentralized exchanges (DEXes) incorporate Bitcoin through letting traders exchange "wrapped Bitcoin" (wBTC), an ERC-20 token on the Ethereum chain, against other ETH-based tokens. This is however a custodial approach, nonetheless, in light of the fact that Bitcoin is held by a third party as the trader temporarily holds wBTC. Additionally, this method doesn't easen the more broad restrictions of DEXes.
"Atomic swaps" have been employed by other exchanges presumably as a non-custodial solution. Atomic swaps, nonetheless, need to be constantly monitored, and in this case, two blockchains. This makes the two blockchains too slow to scale. Also, orders placed above or below the current price level make up most of the volume on a large exchange. The inherent incompatibility with order book based markets becomes a challenge.
Nash has a solution to this problem. The solution is compatible with Nash’s multi-chain state channel system and the matching engine provides optimal non-custodial properties for funds in channels and best-in-class security for funds in open orders. The Nash off-chain matching engine made non-custodial Bitcoin trading on crypto markets that use order books possible.