Adaptor Signature

What is Adaptor Signature?

A cryptographic technique that locks a digital signature behind a secret, enabling conditional transaction execution in Discreet Log Contracts. Adaptor signatures are the cryptographic foundation of Lygos's DLC-based lending. Every possible loan outcome, from full repayment to liquidation at any price point, has a corresponding adaptor signature. When the oracle attests to the BTC price, the relevant adaptor signature is completed, enabling execution of the correct pre-signed transaction. This is what makes Lygos's system deterministic and trustless.

Full Definition

An adaptor signature (also called a signature adaptor or pre-signature) is a cryptographic primitive that creates a relationship between a secret value and a digital signature. The signature is 'incomplete' until the secret is revealed, typically by an oracle attestation. In DLCs, adaptor signatures are used to create conditional transactions: each possible outcome of the contract has a corresponding adaptor signature that can only be completed when the oracle reveals the relevant secret (its price attestation). This enables trustless conditional payments without requiring the oracle to know about the contract.

How Lygos Uses This

Adaptor signatures are the cryptographic foundation of Lygos's DLC-based lending. Every possible loan outcome, from full repayment to liquidation at any price point, has a corresponding adaptor signature. When the oracle attests to the BTC price, the relevant adaptor signature is completed, enabling execution of the correct pre-signed transaction. This is what makes Lygos's system deterministic and trustless.

How Lenders Compare

	Lygos	Ledn	Nexo	Unchained
Technology	Discreet Log Contracts (Bitcoin-native)	Centralized custody	Centralized custody	2-of-3 multisig (manual)
Custody	Non-custodial (DLC)	Custodial	Custodial	Collaborative multisig
Rehypothecation	0% (impossible by design)	100%. Your BTC may be lent out	Yes, platform re-lends assets	No

Full comparison

Why this matters for borrowers

Understanding Adaptor Signature is essential for evaluating non-custodial lending. This technology is what makes it possible to borrow against Bitcoin without surrendering your keys to a third party.

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