Paper 2019/265

TEX - A Securely Scalable Trustless Exchange

Rami Khalil, Arthur Gervais, and Guillaume Felley


Financial exchanges are typically built out of two trusted components: a trade matching and a trade settlement system. With the advent of decentralized ledgers, that perform transactions without a trusted intermediary, so called decentralized exchanges (DEX) emerged. Some DEXs propose to off-load trade order matching to a centralized system outside the blockchain to scale, but settle each trade trustlessly as an expensive on-chain transaction. While DEX are non-custodial, their order books remains trusted, a malicious exchange operator or miner could front-run trades --- i.e. alter trade order execution for financial gain. The scalability limitations of the settlement layer (e.g. Proof of Work (PoW) blockchains) moreover hinders the practical growth of such DEX architectures. We propose TEX, a front-running resilient, non-custodial centralized exchange. Our matching system enforces the trade order sequence provided by traders, i.e. is resilient against trade sequence alteration by the exchange operator. As such the matching system can operate in conjunction with a blockchain based settlement layer (as proposed in the following), or make custodian exchanges provably accountable for their matching process. Our layer-two settlement system executes a trade without holding the assets, and allows to reach similar scales as traditional exchanges (trading volume in USD, number of trades/second), despite a slow underlying ledger. TEX might become a point of availability-failure, but we show how the settlement system's security properties would not compromise the trader's assets, even if the centralized operator is compromised and/or colludes with all other traders. We provide an evaluation on a PoW blockchain.

Available format(s)
Cryptographic protocols
Publication info
Preprint. MINOR revision.
ExchangezkSNARKSZKP recursive compositionMerkle Mountain Rangetime-lapse cryptographyMoonwalk Order
Contact author(s)
arthur @ gervais cc
2019-03-06: received
Short URL
Creative Commons Attribution


      author = {Rami Khalil and Arthur Gervais and Guillaume Felley},
      title = {{TEX} - A Securely Scalable Trustless Exchange},
      howpublished = {Cryptology ePrint Archive, Paper 2019/265},
      year = {2019},
      note = {\url{}},
      url = {}
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