ItchySats — Roadmap to the most awesome Bitcoin DEX

The Vision: Reach for the moon? We reach for the stars!

We are building the first fully non-custodial, peer to peer Bitcoin DEX. — A “fully non-custodial, peer to peer Bitcoin DEX” — What does that mean?

  1. Non-custodial: No platform, no middle man — just you and your keys.
  2. Peer to peer: Trading partners are connected directly, no centralized instance.
  3. Secured on chain: Your positions are securely locked up on the Bitcoin blockchain.
  4. No counterparty risk: The protocol ensures your trading partner is fully backed — the margins are locked on chain for the duration of the CFD.
  5. Accountless: Start it up and trade. No account needed.

Don’t trust, verify!

Proving that a product is non-custodial and peer to peer is not super easy because it might not be immediately visible. There is only one thing we can do: Make it verifyable.
ItchySats’ code is open source, available on GitHub. The CFD protocol used by ItchySats is maintained by the COMIT team on GitHub.

The Roadmap: From here to the moon… to the stars!

We are about to release the ItchySats mainnet beta on Umbrel.

  1. Open a long position as the taker against a fixed maker.
  2. The protocol is completely non-custodial, the setup is on chain.
  3. Positions are closed after 7 days unless closed by the taker earlier (perpetual positions are in the making).
  1. Perpetual CFDs: Allow you to keep the CFD position open for as long as you want. Your positions “roll over” after a fixed interval.
  2. Enable short positions: At the moment the taker can only go long — this will enable going long or short.

Fly me to the moon

In this stage we will focus on opening the market for multiple makers and making CFD positions transferable. This involves being able to trade CFDs in limit orders and trading open positions in a decentralized orderbook.

Reach for the stars

In this stage we will focus on oracles: We will partner with multiple oracle providers to make the solution more secure and scalable. Additionally, more trading pairs are to be agreed upon with oracle providers.

Fullblown P2P DEX

This is the goal. Once we reach this milestone we will have a full peer to peer Bitcoin DEX including a decentralized orderbook, maker pools and multiple oracles. You will be able to open a CFD on pretty much anything that has a value in Bitcoin by then.

Under the Hood: Inside of our Mainnet beta

We have a series of posts in the making that will explain the CFD protocol in detail. In this blogpost we give an overview of what happens under the hood.
Please note that some protocol details are left out in this post in order to keep the blogpost accessible.

  1. Maker: Publishes offers that define the CFD parameters (price offered, min value, max value, possible leverage).
  2. Taker: Connects to the maker to get offers and opens positions based on them.
  3. Oracle: Periodically signs “prices” (in our case the BTC-USD price). The signed price is used to unlock the payout transaction of the CFD to distribute the funds.

Opening a position

Let’s have a closer look at the communication between the three players when opening a position.

Closing a position

Closing and settling a position on chain can be done in two ways. Given that the maker is online, which is usually the case because the maker is a service provider, the taker can propose a settlement at any given time before the CFD ends. The maker agrees to settle at the current price’s payout.

Wallet Management

For the moment, ItchySats includes a wallet. Your ItchySats wallet is derived from a unique seed that is generated when starting the application for the first time. The ItchySats wallet can only be controlled by you. Note that your funds are only meant to be in your ItchySats wallet for a short period of time.