There’s another potential partial solution here if we can create some 
cryptographic protocol for atomically swapping information. This would be used 
to swap the final HTLC sig for the hash preimage, preventing the optionality 
issue. This idea was inspired by a paper called “Timed Commitments” by Dan 
Boneh 
(https://www.iacr.org/archive/crypto2000/18800237/18800237.pdf). 

The high level idea is that each party swaps a commitment to the information 
they want to atomically swap and then slowly reveal verifiable “hints” that 
make it easier and easier to brute force the commitment. Each party takes turns 
revealing a hint. 

The protocol to do something like this in lightning doesn’t exist afaik but it 
seems feasible. This also may fail to work when there are intermediary nodes 
not controlled by the two trading parties. 

I also could be completely off here but I thought the idea was worth sharing. 

Best
Alex

> On Dec 27, 2018, at 10:47, Will Yager <li...@yager.io> wrote:
> 
> Very good point.
> 
> Two possible responses come to mind.
> 
> 1. Cross-asset brokers charge a standard option premium to perform the 
> brokerage. I can't tell if you think this is totally broken or if it's just 
> sad. I don't understand lightning well enough to figure that out on my own - 
> could you expand more on what effects this would have?
> 
> 2. Cross-asset brokers require counterparties to issue them a symmetric but 
> slightly more out-of-the-money call, which they can redeem in the event of a 
> large FX swing. This bounds their FX losses.
> 
> 
> Will
> 
> 
> 
> ‐‐‐‐‐‐‐ Original Message ‐‐‐‐‐‐‐
> On Thursday, December 27, 2018 1:43 PM, ZmnSCPxj via Lightning-dev 
> <lightning-dev@lists.linuxfoundation.org> wrote:
> 
> 
>>    HTLCs allow creation of American Call Options.
> 
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