Confidential OTC Swaps with Singularity

Singularity
3 min readApr 9, 2024

As a reminder, Singularity is your gateway to the DeFi ecosystem confidentially. We’ve integrated with top DeFi protocols, allowing you to tap into existing liquidity seamlessly while maintaining confidentiality.

In our previous awareness piece, we discussed many of the on-chain actions you can execute within the Singularity protocol including Swaps, LP’in, staking, lending, and borrowing while preserving your commercial confidentiality.

In this piece, we are going to delve into the intricacies of OTC swaps and how our users can leverage this feature with 100% obfuscation and confidentiality.

OTC Transfers — Traditional, Current DeFi process, the Singularity way

Traditional:

As a quick refresher, an OTC (Over-the-Counter) transaction involves a direct trade between a buyer and a seller, typically for assets not listed on formal exchanges, with the process often facilitated by a middleman such as a broker.

In these transactions, the buyer and seller may either have a pre-existing relationship, or the facilitator may act to match the buyer with an appropriate seller.

Current DeFi Process:

In the DeFi ecosystem, parties may engage in OTC swaps for various reasons, such as minimizing market impact or ensuring transaction confidentiality. While the overall process mirrors that of traditional markets, a key distinction lies in the execution and settlement mechanism.

In DeFi, settlements are often automated through mechanisms like atomic swaps. This means once both parties input the agreed-upon amounts into a DeFi OTC application, the swap is automatically executed.

It’s important to highlight that details of the transaction, including wallet addresses, transferred amounts, types of assets, and other relevant information, are recorded and publicly accessible on the blockchain.

How OTC Transfers are Confidential with Singularity

Having explored the evolution of OTC transfers and the distinctions between traditional markets and the DeFi ecosystem, we now focus on how Singularity achieves complete obfuscation for OTC swaps.

Within Singularity, users desiring to conduct an OTC swap can do so with total obfuscation, provided they have completed KYC or KYB processes, eliminating the need for an escrow service.

Utilizing atomic swaps, our users can conduct negotiations directly if there is a pre-existing relationship, or Singularity can facilitate matching buyers and sellers through our extensive liquidity network.

To illustrate this with a practical example:

  • User A possesses 1000 ETH, and User B holds an equivalent value in Token X. Both assets are deposited into the Singularity contract. Importantly, User A and User B have both passed KYC or KYB, qualifying them to use our protocol.
  • Having a pre-existing relationship, User A and User B decide to negotiate the terms of their swap offline.
  • Upon reaching an agreement, User A and User B can then execute an atomic swap using our internal transfer feature powered by zk-proofs. This transaction is conducted with complete obfuscation, ensuring that no details are recorded on-chain.

This process exemplifies how Singularity enables confidential OTC swaps, leveraging atomic swaps to ensure confidentiality and compliance without compromising on security.

Conclusion:

If this is something you are interested in exploring more and think it could be a positive addition to your platform. Set up a call here.

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Singularity

Leveraging the latest zk technology onchain. Invest in DeFi confidently, transact onchain confidentially.