Good morning Lawrence, > > On re-reading your argument, no, you have misunderstood massively. > > The two HTLCs together form a single American Call Option, issued by the > > exchange to the initiator of the "payment". > > It is not the initiator somehow issuing an American Call Option to itself > > by routing a payment to itself. > > It is the initiator forcing the exchange to give it the equivalent of an > > American Call Option by routing a payment to itself. > > In particular, the cost of locking the WJT asset is paid by the exchange, > > not the initiator of the contract. > > The initiator of the contract must deposit 1 WJT into the exchange before the > exchange will create the contract. Therefore the opportunity costs are borne > by the initiator.
You still have not understood. We are discussing here a non-custodial exchange that acts as a Lightning Node on both BTC and WJT networks. Suppose I know of such a non-custodial exchange. I create a BTC channel to this. Then I create a WJT channel. In both cases, yes, I have to lock my assets into the channels created (unless we now have dual-funded channels and I convince the exchange node to fund the WJT channel). What I do then is to send out via the WJT channel to any WJT-accepting merchant and get something in value equivalent to the WJT I send out. It can be something as trivial as a submarine swap, where I get ***onchain WJT*** by paying my ***offchain WJT*** over Lightning. In this way, the WJT in the channel is ***no longer mine***, and given a fungible WJT asset then a submarine swap means I have reacquired the WJT I put in the channel in the first place; it is now available to me onchain to dispose of as I wish. If the WJT in the channel is locked up in an HTLC, ***I am not paying the opportunity costs for locking WJT***. It is the exchange which pays the opportunity cost since I have already paid the WJT to the exchange for a separate "unrelated" payment. Afterwards, I can coerce the exchange to issue me an American Call Option by routing a BTC payment from myself to a WJT payment to myself. Since the CLTV will be a future time and date, I can always delay failing or accepting the incoming HTLC until just before the indicated locktime. All your analysis means is precisely that nobody will rationally act as a Lightning node swap exchange, since being an exchange implicitly means you are offering American Call Options that are premium-free. If there are no Lightning node swap exchanges, then cross-asset swaps over Lightning cannot be done: nobody will enable the swap. Hence the conclusion: Lightning Network will remain single asset. Regards, ZmnSCPxj _______________________________________________ Lightning-dev mailing list Lightningemail@example.com https://lists.linuxfoundation.org/mailman/listinfo/lightning-dev