Interpool: a liquidity pool designed for interoperability that mints, exchanges, and burns (2410.00011v1)

Abstract: The lack of proper interoperability poses a significant challenge in leveraging use cases within the blockchain industry. Unlike typical solutions that rely on third parties such as oracles and witnesses, the interpool design operates as a standalone solution that mints, exchanges, and burns (MEB) within the same liquidity pool. This MEB approach ensures that minting is backed by the locked capital supplied by liquidity providers. During the exchange process, the order of transactions in the mempool is optimized to maximize returns, effectively transforming the front-running issue into a solution that forges an external blockchain hash. This forged hash enables a novel protocol, Listrack (Listen and Track), which ensures that ultimate liquidity is always enforced through a solid burning procedure, strengthening a trustless design. Supported by Listrack, atomic swaps become feasible even outside the interpool, thereby enhancing the current design into a comprehensive interoperability solution