Themis

Traditionally, transactions between digital currencies are executed on crypto currency exchanges. Exchanges achieve this by creating internal accounts, which are also called IOU (I Owe You) accounts. In this mode, it’s easy to achieve high transaction speeds, However with the following issues; security, lack of liquidity, time lag of transactions. Regarding the transaction time lag, transaction results aren’t submitted on the blockchain in a timely manner, and result in not being cashed immediately.

The model of decentralised exchanges was built to address the issues of centralised exchanges. Most of decentralized exchanges are based on the Multi - Signature Scheme or Hashed Time - lock Contract (HTLC) to ensure atomic transactions. However, Multi - Signature Schemes depends on the Trusted Third Party(TTP) which is vulnerable to collision attacks and DoS attacks. For the HTLC scheme, attackers may launch DoS attacks which could result in users unable to make refunds in a given moment.

Current centralized coin exchanges and decentralized coin exchanges are focusing on transactions between digital currencies, but paying little attention to satisfy the requirements of fair exchanges between digital currencies and physical goods.

During the transaction between digital currencies and physical goods, it’s hard to achieve transaction and delivery at the same time, thus the fairness of atomic exchanges face a challenge: a buyer doesn't want to pay without assurance that the seller will ship the purchased goods, while a seller doesn't want to ship without assurance of that payment. Traditionally, a trusted third party is required for hosting transaction funds and arbitration, and during the period between transaction and delivery, the third - party needs to host buyers’ transaction funds to satisfy fairness. One common solution of third - party payment is using the 2 - of - 3 multi - signature. In this scheme, each buyer, seller and third - party holds a private key. A buyer sends his money to a multi - signature address, so only the party that has 2 pri vate keys of these 3 can unlock the address and get the money. If things go well, the buyer will send his private key to seller, and seller will get the money. If any dispute arises, the third - party will mediate, resolve the dispute, and send his key to th e winning party to finish the payment (or refund). There are two advantages of this escrow protocol. Firstly, If there is no dispute, buyers and sellers can close the transaction without the consent of the third party.. Secondly, the third - party can’t take the hosted funds because the third - party only has his own key, the hosted funds can only be taken with at least 2 keys of the 3 parties. But this protocol faces two critical problems. Firstly, collusion attacks. The hosting party can easily contact the sp ecific buyer or seller for collusion unless the escrow protocol is meticulously designed. Secondly, DoS attacks. Even though the third - parties can’t take the hosted funds, they can also refuse arbitrating disputes, and lock the hosted funds.