Airswap is a peer-to-peer, unmanaged trading protocol and network for trading ERC20 tokens, allowing traders to identify potential counterparties, negotiate directly privately and execute on the chain.

The AirSwap platform works by allowing users to communicate with each other what tokens they want to exchange and at what price. When both parties are ready to complete the exchange, the exchange protocol, as ethereum's smart contract, executes the transaction.

Order matching

Orders are aggregated and matched using the AirSwap indexer. When a marketer is interested in trading, they post an indication through the indexer that they are interested in buying and selling an asset down the chain. The prospective recipient can then query the indexer to identify potential counterparties. When Taker sees an order they want to accept, they are matched with Maker and can negotiate directly using Peer Protocol. As negotiations progress, either party can request a quote from Oracle, which provides a price based on off-chain market information.

Transaction execution

Once an agreement is reached, it is determined to expire, after which the agreement is invalid. Maker may also cancel orders at any time prior to execution. Otherwise, Taker can invoke an on-chain atomic exchange to ensure that the order matches the trader's specifications and that the time of expiry indication has not yet passed. Once this happens, the order is executed.

The platform has the advantage of a decentralized exchange in that users have complete control over their money until the trade is executed, so both parties either get what they trade or they don't.