Cardano requires a minimum ADA of about ~1.14 to be attached with a token depending on the token bundle size. This is required to protect the chain from attacks and spam, but it makes it painful for users to send tokens out to someone as they must also send that minimum ADA along with the tokens. The Warp Transaction in Typhon Wallet allows users to send tokens without spending that minimum ADA.

How does it work?

To understand the warp transactions it is required that we deep dive a bit into how UTXOs work, transactions are built, signed, and submitted on the network.

In Short

The Warp Transaction is sent and signed by a sender and is also signed by the receiver to accept the incoming tokens. It is pure UTXO TX, utilising multi-signature, and an on-chain mechanism without using any smart contracts. The Typhon Wallet does all the hard work to facilitate the process in a user-friendly experience.

Some Useful Info

Warp Transactions only work between Typhon Wallet users
The Warp Tx can be rejected/cancelled by either party
The token containing UTXOs are blocked until the warp tx completes or gets cancelled. You can easily see this info on the home page. It is only your local UI-based locking.
The Warp TX automatically expires in 24 hours, so that you can be sure that your TX will never be on the chain after 24 hours of no signing by the receiver.

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TL;DR

Building A Transaction

The wallets build transactions using the available wallet UTXOs, if each UTXO is from a different address (HD wallets) they need all those signatures from the wallet to be accepted on the chain. For the network, it does not matter if the UTXOs are from a single wallet or different.

This is where we can do the magic. Typhon uses UTXOs from the receiver wallet to compensate for the minimum ADA required, basically using the minimum ADA amount from the receiver wallet itself so that the sender does not have to spend from their pocket. (Yes, the receiver must have some balance)

Signing The Transaction

The transaction above is called a multi-signature transaction, something that has been around since the very early days of Cardano. This means that both the sender and the receiver need to sign this TX, but do not worry, Typhon Wallet makes this so seamless that it is only a few clicks, and is very similar to how you are used to doing normal transactions.

The only difference is that the receiver will see an incoming token transaction and will have to sign it to accept the tokens. And one can always reject the tx.

The tx is then encoded in the CBOR data structure, which contains the full transaction information and the signatures.

Huh, How can the receiver see an incoming TX?

Let’s see how the normal transactions are submitted to the network. The transactions once built and signed, are encoded into CBOR and then sent to be broadcast on the Cardano network. Note that once a tx is verified by the node, it sits in a mempool, many nodes on the network keep a copy of this tx on their own mempool. The tx is picked up from the mempool and added to a block when its turn arrives. You can see the currently pending transactions in the mempool waiting to be included in a block on the Cardanoscan Mempool view, See here, https://cardanoscan.io/mempoolTransactions

The Warp Transaction utilises an intermediate mempool managed by Typhon Backend. The tx is stored in this intermediate mempool until the tx is fully signed and then it propagates to the Cardano Network. See below,

Ahm… Ahm.. A mempool managed by Typhon?

You must be wondering, isn't there a problem having my transaction stored with Typhon’s mempool? See below,

If you are using a light wallet, your built and signed transactions are submitted through your wallet provider infrastructure. You are using a custom submit endpoint? see point 2,
Your built and signed transactions once submitted to the network are ALWAYS available for anyone to view. The explorers already process this data and show transactions happening on the chain. (Yes, the signatures, along with your wallet public keys are stored on the chain, which were part of the transactions)
We do not store any special, specific or extra stuff other than what you are already submitting on the network.

While Warp Transactions is a feature provided by Typhon for ease of doing token transactions, you can always choose not to utilise it and process a normal send transaction.