RFQ

Request For Quote (RFQ) is a mechanism that simplifies sending Taproot Assets over Lightning Network channels.

When sending Taproot Assets over the Lightning Network, an Edge Node is needed. This Edge Node receives the Taproot Asset in the channel with the direct user and swaps it for bitcoin. As the swap rate between Taproot Assets and bitcoin likely fluctuates, the user may make a Request for Quote (RFQ) to the Edge Node before generating a Lightning Network invoice or initiating a payment.

This request is made using BOLT 01 messages over an existing encrypted and authenticated BOLT 08 connection. They are encoded as TLV records and delivered over LND's custom message channel. The message type namespace starts at MsgTypeOffset (which is CustomTypeStart + 20116, where 20116 encodes "tap". The connection already exists because it is used for establishing and coordinating the Taproot Asset Channel in a way very similar to normal Lightning channels. For more information about connection and messaging, see the Last Mile Routing section of Taproot Asset Channels BLIP.

Learn more: Edge Nodes

The Request for Quote contains a rate and an expiration time, which allows the sender to decide whether they want to complete the payment and craft a route to the intended recipient.

Similarly when receiving Taproot Assets over the Lightning Network, RFQ is used by the recipient to generate a satoshi-denominated Lightning invoice.

Message Types

There are three message types, each available in buy and sell variants:

Request (MsgTypeRequest): Initiates negotiation. The user tells the edge node what asset and amounts are involved, and optionally proposes a rate hint.

Accept (MsgTypeAccept): The edge node agrees to the proposed terms at a specific rate. The accept is Schnorr-signed over the message fields so neither party can modify the agreed rate later.

Reject (MsgTypeReject): The edge node declines, with a machine-readable error code and human-readable message.

The Mock Oracle

For testing purposes, tapd includes a mock oracle. This oracle allows the tester to set up a static exchange rate between Taproot Assets and bitcoin. When added to lit.conf, all Taproot Assets configuration options have to be pre-fixed with taproot-assets.

taproot-assets.experimental.rfq.priceoracleaddress=use_mock_price_oracle_service_promise_to_not_use_on_mainnet

You may set a fixed swap rate directly in the tapd.conf file as well in Taproot Assets units per bitcoin to avoid building your own custom price oracle. To trade one unit per satoshi for example, set the value to 1:

taproot-assets.experimental.rfq.mockoraclesatsperasset=1

Alternatively, you can also set a price of asset per Bitcoin. Remember that if your asset has decimal places, enter the full precision. So if your asset carries two decimal places, add two zeroes. In the below example, we define the price of our asset as one asset per satoshi, without decimal places:

taproot-assets.experimental.rfq.mockoracleassetsperbtc=100000000

Both peers of a Taproot Assets channel may set up an RFQ oracle. Alternatively, one of the nodes may chose to operate without an oracle, simply accepting all quotes from the Edge Node:

taproot-assets.experimental.rfq.skipacceptquotepricecheck=true

Sample Oracle

For signet, a sample oracle is deployed at tassandra.laisee.org for asset group key 02db9c81b87830b73331e0f1f69271791f13a24848ceec9bd38e32383e384cc468

It can be configured by adding only the following to your lit.conf (the sample oracle is not compatible with that of the mock oracle):

taproot-assets.experimental.rfq.priceoracleaddress=rfqrpc://tassandra.laisee.org:20590

For regtest, signet and testnet you may also deploy your own instance of Tassandra.

Message Types

The Mock Oracle

Sample Oracle

Further reading