Atomic Swaps As Options: A Derivative Finance Approach

10 Pages Posted: 13 Jun 2022

Date Written: June 4, 2022


We investigate how no-arbitrage conditions from finance impact the applicability of conventional distributed-computing tools in DeFi. Many synchronization proto- cols resemble derivative structures and are therefore priceable using standard tech- niques. By applying these techniques to stylized synchronization protocols we can see how dynamic-replication trading imposes severe limits on what can be achieved. What we find are emergent conflicts of interest when financially-motivated trading counterparties are also participants in a cooperative recordkeeping system.

Keywords: DeFi, distributed computing, compound options

Suggested Citation

Reiter, Jonathan, Atomic Swaps As Options: A Derivative Finance Approach (June 4, 2022). Available at SSRN: or

Jonathan Reiter (Contact Author)

ChainArgos ( email )

1 North Bridge Road
Singapore, 179094

Data Finnovation ( email )

1 North Bridge Road #01-01
High Street Center
Singapore, 179094

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