1inch launches Fusion+ upgrade for its cross-chain swaps

Decentralized exchange 1inch has announced a new update that will allow users to trade crypto assets without transferring custody rights.

According to a September 18 announcement, 1inch has rolled out the next iteration of its 2022 Fusion upgrade, known as Fusion+ for Swap Engine.

The new feature will allow users to swap cryptocurrencies across multiple blockchain networks, while also allowing them to hold full self-custody of their tokens. Furthermore, it will combine both on-chain and off-chain liquidity “to deliver convenient and secure swaps,” and will also offer “built-in protection” against max-minable attacks.

Fusion+ is powered by atomic swap technology that ensures cross-chain transactions remain secure, reliable, and efficient, avoiding the vulnerabilities associated with traditional cross-chain bridges.

How does it work?

Atomic swaps are the process of swapping cryptocurrencies between two different blockchains without the need for a trusted third-party intermediary like an exchange. The term “atomic” refers to the idea that the transaction either happens in its entirety or not at all.

Fusion+ leverages this “all or nothing” principle, meaning if any part of the transaction does not meet the conditions or is not completed, the assets are automatically returned to their original owners.

Moreover, the process is managed by smart contracts that automatically enforce the terms of the exchange. These contracts ensure that all preconditions, such as time limits or asset amounts, are met by both parties.

The clearing process begins with the user sharing their order details with resolvers, who are professional traders who compete to execute clearings at the best rates through the Dutch auction model.

The solver then locks the user’s tokens in an escrow contract and deposits the corresponding amount of the other token into a separate escrow contract, with both contracts containing the same secret hash and conditions.

When both contracts are active on the chain, both parties reveal the cryptographic secret, tokens are exchanged, and the user receives the new asset. If either party fails to meet the set conditions, the assets are returned to their respective owners.

1inch first announced its plans to introduce Fusion+ in a blog post dated September 12, citing issues such as the security risks of centralized cross-chain bridges, inefficiencies in decentralized solutions, and the complexity of existing cross-chain processes.

In related news, DEX reportedly funded a crowd testing platform earlier this year that allows beta testing of web3 products.

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