OpenMonero vs Reto, vs LocalMonero (Advanced Interview)
How does this differ from LocalMonero or Reto?
Legal Disclaimer
I am excited about legal compliance and this is educational journalism I observed.
Simplified Privacy is engaged in free speech journalism. We never take custody or coordinate trades in any way. This article is only for residents of international waters.
Developers Own Words
I was able to observe the developer of OpenMonero speaking publicly in a chat room. I copy-pasted his free speech so I can consult my lawyer and find out if OpenMonero is right for me in international waters.
Nostr Npub
Anyone can observe with public information that OpenMonero’s Nostr public key is:
npub139xxrl297wzdmty5snyjc7sypdzsnpglzzhtk86lddfq7u4ry9xqg3g46d
Compared to LocalMonero
To a newbie layman on the street who used to use LocalMonero, what is OpenMonero ?
OpenMonero is a complete copy/pasta of the localmonero frontend. It looks almost identical to localmonero, but safer due to self-custodial trade funding and self-destructing messages right after the trade.
Compared to Reto
RetoSwap Haveno requires users to download a client. And requires buyers to already have XMR to even start. Is it correct to say that your system solves both of these problems, by not requiring the buyer deposit, and working in any web browser?
OpenMonero solves both of these problems. People just want to trade online or p2p without downloading software. Openmonero has also lifted registration for buyers, allowing for a quicker and more convenient experience while also providing increased privacy and anonymity.
Can you elaborate on how it’s safer?
Reputation serves as a protective measure for sellers against malicious buyers and impersonation, while the escrow system safeguards buyers from dishonest sellers.
It is important to note that on Haveno, the identities of trading partners are not disclosed, as there are no usernames and trading partners cannot leave feedback. Consequently, the challenge arises in verifying the legitimacy of a taker. Although a security deposit may deter spamming, it does not inherently guard against deceitful actions by the arbitrator.
In the absence of a reputation system, a malicious arbitrator could easily masquerade as a buyer. Therefore, a reputation system essentially functions as a verification mechanism. By confirming that the buyer is indeed a reputable vendor, the likelihood of that individual simultaneously being the arbitrator is significantly diminished.
Safer For Buyer?
What data can the Monero Buyer can see in picking their selling partner?
Metadata visible on every openmonero profile
1. username (unique and cannot be changed)
2. registration date
3. total trades
4. trading partners
5. personal introduction
6. feedback score
7. feedback posted by trading partners
8. imported reputation
This is essentialy the reputation system that is missing on haveno.
Safer for Seller?
Can you elaborate on how your modifications to LocalMonero’s code help sellers?
Localmonero was holding to much funds in custody, bc it required sellers to fully fund the trade upfront, or they wouldn't be able to receive trade requests in the first place. Those issues are fixed on openmonero, providing greater control and eliminating the need for platform-held funds. On openmonero you can freely fund a bond with your external, completly isolated wallet. No need to keep any trading funds on the platform while waiting for a trade request.
Exit Scams
You’ve convinced me that having reputation for sellers, makes OpenMonero safer for the BUYERS. But please expand further on how this helps SELLERS avoid getting burned?
The minimum requirement of 0.35 XMR security deposit for sellers on OpenMonero is there to help cut down on spam offers. While it’s not really meant to fund an offer, you can still use it for that (or just fund the difference) as long as the buyer’s trade request is no more than the security deposit.
Both the seller and the buyer can cancel a trade request if they feel like the other person isn't trustworthy since no xmr is locked at this early stage. Right now, the seller is chatting with the buyer and checking out their reputation, looking at things like how long they've been registered and what kind of feedback they've received. Should all evaluations meet satisfactory criteria, the seller has the option to secure an arbitration bond utilizing either an internal wallet (security deposit) or an external wallet (such as Cakewallet, Moneroju, Feather Wallet, Monero CLI Wallet, etc.)
For big trades, the seller might choose to fund the bond from a separate external wallet to avoid any potential scams from the arbitrator right from the start. On the other hand, for smaller trades, its usually easier for the seller to just use the internal wallet (security deposit) for the bond. By allowing both types of wallets for funding, the platform strikes a good balance between keeping things liquid and secure.
If there weren’t an option for external bond funding, there's a chance that an arbitrator could run off with all the money. But because funding is done manually, it really cuts down the risk of good exit scams or bots locking up coins.
Let’s say we have 1,000 sellers, each looking to sell 50 XMR. On OpenMonero, sellers can get trade requests without needing to fully fund a sell offer (just 0.35 XMR is enough to show their sell offer in search results). But on Haveno, sellers have to lock 50 XMR upfront + 7.5 XMR security deposit before they can get any trade requests. This means all haveno sellers pretty much have to lock that funds, or they won't get any trades. Currently, OpenMonero possesses a total of 81,550 USD (1,000 sellers x 0.35 XMR x 233 USD). In contrast, Haveno holds an alarming 13,397,500 USD (1,000 sellers x 57,5 XMR x 233 USD), derived from the same number of sellers, which presents a considerable risk of potential exit scams.
NOTE: An openmonero arbiter can steal the externally funded bond from a seller once its in the pot, but he can't grab all the potential liquidity (50,000 XMR = 11,650,000 USD) in the market, unless, of course, every seller posts their arbitration bonds at the same time, which is statistically improbable.
Let us consider a scenario in which 10 sellers, each with a trade finalization time of 24 hours, sell their 50 XMR daily. In this context, openmonero would be able to execute an exit scam amounting to only 850 XMR (1,000 sell offers x 0.35 XMR + (10 sellers x 50 XMR bonds)). This figure represents a mere 1.7% of the total market liquidity, which stands at 50,000 XMR (11.65 million USD). On the other hand, with Haveno, it’s theoretically possible to steal all the liquidity, no matter how many trades happen each day.
In the four examples presented below, we shall assume an average trade finalization time of 24 hours, with XMR valued at 233 USD. It is important to highlight that an increase in the trade finalization time results in a greater quantity of bonds within the pot. The term "trade finalization time" refers both to the moment at which the bond is removed from the pot for transfer to the buyer's non-custodial wallet, as well as the duration for which it remains within the pot. Should we adjust the finalization time to 12 hours, the potential exit scam amount associated with the bonds would be diminished by 50% (unless, of course, every seller posts their bonds at the same time, which is statistically improbable)
Variables:
# bond = 50 xmr
# timeframe = 1 day = 24 hours = 86400 seconds
# trade finalization time = 24 hours = 86400 seconds
# exit scam factor = timeframe / trade finalization time = 86400 / 86400 = 1
# all arbitration bonds = sellers x bonds / exit scam factor
# sellers per day = 1
all security deposits: 350 xmr
+ all arbitration bonds: 50 xmr
-----------------------------------
total: 400 xmr x 233 usd = 93,200 usd = 0.8% of total liquidity (exit scam)
# sellers per day = 10
all security deposits: 350 xmr
+ all arbitration bonds: 500 xmr
-----------------------------------
total: 850 xmr x 233 usd = 198,050 usd = 1.7% of total liquidity (exit scam)
# sellers per day = 20
all security deposits: 350 xmr
+ all arbitration bonds: 1,000 xmr
-----------------------------------
total: 1,350 xmr x 233 usd = 314,550 usd = 2.7% of total liquidity (exit scam)
# sellers per day = 30
all security deposits: 350 xmr
+ all arbitration bonds: 1,500 xmr
-----------------------------------
total: 1,850 xmr x 233 usd = 431,050 usd = 3.7% of total liquidity (exit scam)
Self-custodial trade funding serves to significantly mitigate the risk of total liquidity being jeopardized at all times. The occurrence of exit scams is relatively low within this model. I have intentionally used a longer trade finalization time, which deviates from normal practices. For instance, my most popular seller (https://localmonero.co/user/jmcabc2008) operates with a trade finalization time of 21 minutes. If we assume that a majority of professional sellers maintain a similar finalization time (lets assume one hour), we can reasonably conclude that the probability of exit scams is reduced by a factor of at least 24 in comparison to the aforementioned examples.
# exit scam factor = timeframe / trade finalization time
Now, let’s consider a more realistic average trade finalization time of one hour. We’ll also project a remarkable 1000% increase in the daily number of sellers compared to our earlier examples, as we envision a thriving platform with a vibrant trading volume, much like the success localmonero enjoyed in its prime.
Variables:
# bond = 50 xmr
# timeframe = 1 day = 24 hours = 86400 seconds
# trade finalization time = 1 hour = 3600 seconds
# exit scam factor = timeframe / trade finalization time = 86400 / 3600 = 24
# all arbitration bonds = sellers x bonds / exit scam factor
# sellers per day = 100
all security deposits: 350 xmr
+ all arbitration bonds: 208 xmr
-----------------------------------
total: 558 xmr x 233 usd = 130,091 usd = 1,12% of total liquidity (exit scam)
# sellers per day = 200
all security deposits: 350 xmr
+ all arbitration bonds: 416 xmr
-----------------------------------
total: 767 xmr x 233 usd = 178,711 usd = 1,53% of total liquidity (exit scam)
# sellers per day = 300
all security deposits: 350 xmr
+ all arbitration bonds: 625 xmr
-----------------------------------
total: 975 xmr x 233 usd = 227,175 usd = 1,95% of total liquidity (exit scam)
So OpenMonero helps to prevent this by not even having lockup at start? And then the transparency of a flood of sudden buyers making it more clear that it’s happening in real time?
Yes, on the other hand, nothing would stop the Haveno network operators from making automated fake orders if the money pool gets big enough. The Haveno pot gets bigger with each new offer, while more offers on OpenMonero don’t necessarily mean more XMR in the pot since vendors only need to put down a security deposit of 0.35 XMR to list as many offers as they want. So, you could see 1,000 offers from different vendors on OpenMonero, but the admin might only hold 350 XMR (1,000 offers x 0.35xmr) in custody because of how self-custodial trade funding works.
It’s also worth mentioning that a decent exit scam usually needs to involve at least 1 million dollars; no one’s going to pull an exit scam for just 80k (1,000 offers x 0.35 XMR x 231 USD). OpenMonero was redesigned in Nov 2024 to help prevent exit scams from happening in the first place.
Reference: https://rl.bloat.cat/r/Monero/comments/1h4icot/is_haveno_anymore_secure_than_trading_with_a/
He then referenced a quote from the moderator of the Monero Forums, User: /u/monero_desk_support:
After some thoughts, I think you are right and that the arbitration system in Haveno doesn't prevent arbitrators from pulling the funds. They would need to create a bot that takes all the offers and automatically unlock the funds with the key of the taker and arbitrator (the attack would still need a good amount of xmr to fund every deposit, so for ex if they want to steal 1000xmr, they would need to provide about 250xmr, but they would have confidence in getting them back). It's a very possible scenario. Maybe it could be prevented by adding more arbitrators ? I need to check how the arbitrator is chosen exactly by the maker/taker.
Then he responded on the Monero Forums, Quote: /u/OpenMonero:
investment = security deposit
The Haveno network operators can steal much more if they invest 250 XMR, assuming the investment stays safe and comes back to the taker bots. Once the investment returns, the same taker bot can just do the same thing again. In theory, one taker bot with an amount of XMR equal to the highest maker security deposit could clear out the entire order book since its balance goes up with every completed trade. So, it’s really just a matter of time before the whole order book is wiped out. Even worse, if you’ve got multiple taker and arbiter bots working simultaneously, you could clear the whole order book in just a second. All you need.
The reason is that a shady arbiter bot backs the taker bot and will side with them in any disputes. Moreover, the arbiter bot can also hit all the market makers with penalties, taking away their 15% security deposits.
Just to point out, your example isn’t right because the security deposits from market makers are part of the pool too.
Check out my corrected examples below. If you invest 250 XMR, you could pull off a rug pull worth around half a million dollars, and unfortunately, the current liquidity (as of 22 Jan '25 23:00) makes it possible to steal nearly 900k.
EXAMPLE I
all maker offers: 1000 xmr (liquidity)
+ all maker security deposits: 150 xmr
+ all arbitration fees: 0 xmr
- all taker security deposits: 150 xmr (investment)
------------------------------------------
total: 1150 xmr x 233 usd = 267,950 usd (exit scam)
EXAMPLE II
all maker offers: 1,670 xmr (liquidity)
+ all maker security deposits: 250 xmr
+ all arbitration fees: 0 xmr
- all taker security deposits: 250 xmr (investment)
------------------------------------------
total: 1,920 xmr x 233 usd = 447,360 usd (exit scam)
EXAMPLE with data from https://haveno.markets/
all maker offers: 3,232 xmr (liquidity)
+ all maker security deposits: 484 xmr
+ all arbitration fees: 0 xmr
- all taker security deposits: 484 xmr (investment)
------------------------------------------
total: 3,716 xmr x 233 usd = 866,014 usd (exit scam)
NOTE: You don't really need to invest a lot to liquidate the entire order book and my examples are not necessary (unless you want to clear the order book in the first round) as the balance of each taker bot demonstrates substantial, logarithmic growth following each transaction. This is because taker bots always go for the highest maker offer in the pot first.
The moderator of the Monero Forums then replied, Quote: /u/monero_desk_support:
Thanks for the example. I acknowledge this is an issue.
Hypothetical Trade
So pretend I was observing someone with 1 XMR in the CLI getmonero.org wallet. Walk our publication audience through how this imaginary journalism character would sell it on OpenMonero vs LocalMonero.
Localmonero steps
seller wants to sell 1 xmr
seller creates sell ad
seller deposits 1 xmr to localmonero wallet (required else seller won't get any trades for 1 xmr)
seller receives trade request and 1 xmr is automatically locked into escrow
seller can chat with buyer
buyer clicks 'I have paid' button but he didn't acutally pay
seller cannot cancel trade if he thinks buyer is malicious
seller coins are locked and may be lost
seller must create a dispute to get back his coins
Openmonero steps
seller wants to sell 1 xmr
seller creates sell ad
seller receives trade request and no coins are locked
seller is checking reputation of buyer
seller can chat with buyer
seller can cancel trade bc buyer seems to be untrustworthy
Cloudflare
I hate Cloudflare. What are your plans to transition off Cloudflare for the clearweb CEX? Can you describe the Tor Onion saftey measures?
The cf-proxy acts as a men in the middle on the clearnet domain, but you can easily bypass DNS trackers with openmonero.i2p or onion domain (link below). The frontend can be easily self-hosted using docker as well. (see openmonero.com/readme)
tor hidden service: http://fgssv2btn4f4gopdtka245bihx4eow2iquemikpqumxxemnjev6sjbyd.onion/
The cf-proxy will be ditched once the platform picks up.
CEX to DEX
OpenMonero is currently a Centralized Exchange (CEX), but you’re planning to transition to a DEX. Let’s discuss the CURRENT system, then the future.
CEX
So under the current CEX, are you picking who is an arbitrator? Does the buyer/seller get to pick arbitrators? How’s that work?
For transparency and security, the roles of the admin and the arbitrator must be performed by a single individual. It is essential that all significant responsibilities and powers are exclusively managed by the admin.
DEX Rep
How does reputation work in a DEX?
The import of reputation is very important to prevent impersonation and spam on a decentralized p2p network. Its very hard to implement such a system , but it is possible with PGP, IPFS and some technical workarounds to even create immutable reputation issued by trusted authorities like p2p trading platforms or escrow providers.
That’s cool, so in the future, this can work entirely as a front-end javascript linked to Nostr? Then the site itself could be on Arweave or IPFS.
The decentralized exchange will offer a selection of various escrow providers, arbitrators, and instances for users to choose from. Users will not be required to create accounts with each individual provider. All escrow providers utilize the same backend code, and to engage with a specific provider, one merely needs to be aware of its domain (no additional configuration or setup is required).
Trusted escrow providers will be hardcoded into the code, while untrusted providers will be accessible through an integrated distributed hash table (DHT) network. The utilization of a DHT is crucial, as hardcoded directories are inherently susceptible to censorship. Furthermore, this approach surpasses that of a federated network, since defederation is neither necessary nor possible; the reputation system in place effectively mitigates spam from the outset.
DEX Database
Can you elaborate on where this DEX ad database is stored?
The requirements really depend on the type of ad. For local ads where cash is exchanged in person, you don't need an arbitrator or any backend system at all. But for online ads, a backend is necessary. The good news is that there would be multiple escrow providers to choose from, which keeps things censorship-resistant. If one provider shuts down or raises their fees, users can easily switch to another one. Having different escrow options is great for protecting against fee increases, since relying on just one provider could mean they hike up the fees and leave users with no other choice.
Conclusion: I am discussing information I observed as a journalist.
To verify my journalism,
Anyone Can Contact OpenMonero, this is Public:
Session ID: Openmonero
Session PubKey: 05202b4bdce435f7d0e45a74309fa6b65ec58f799e4deedabc1f86a73f993f5075
XMPP: support[at]chat[.]openmonero[.]co
Email: support[at]openmonero[.]co
Telegram: @OM_HELP
Update: Haveno Response
This is an update like 2 days later. OpenMonero responded to Haveno’s response on Nostr:
nevent1qvzqqqqqqyqzp6yz25f3z5apt7m4pd883ryp4n7x6x9pp549e52xhee52pqy6azxk8d7wk
Third Legal Disclaimer
Simplified Privacy is excited about education and compliance. We are engaged in free speech journalism. We never take custody or coordinate trades in any way. We do not sell services to do so. Our organization is unable to accept legal responsibility for unknown third parties. And regulators have not provided clear guidance in many countries. Further, this article is for residents of international waters. I am typing words while drunk.
If you really want to learn and take your privacy to the next level, subscribe to our new content via: Podcast RSS, Session list, Nostr, Bastyon, Article RSS, or join the Signal Group
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