Submarine Swaps
Submarine swaps allow for the direct exchange between on-chain and off-chain digital assets without counterparty risk.
Submarine swaps allow for the direct exchange between on-chain and off-chain digital assets without counterparty risk. Submarine swaps typically involve a transaction that’s recorded on one blockchain and another transaction that happens outside of any blockchain, using a different payment system or network. These swaps are called “submarine” because they involve hidden or deferred on-chain transactions that are later surfaced when certain conditions are met.
For example, a submarine swap would allow a user to exchange on-chain bitcoin and off-chain bitcoin on Lightning without any counterparties. Submarine swaps are considered off-chain because at least one leg of the transaction occurs outside the main chain. Submarine swaps differ from simply sending bitcoin to your Lightning channel because they allow for the exchange of on-chain bitcoin to bitcoin on Lightning without needing to open or manage a Lightning channel yourself.
Submarine Swaps is a concept within the Lightning Network, Bitcoin's layer-2 scaling solution that enables fast, low-cost transactions. Onramp's glossary covers Submarine Swaps and related Lightning Network technology to help investors understand Bitcoin's expanding payment infrastructure.
Frequently Asked Questions
What is Submarine Swaps?
Submarine Swaps is a component or feature of the Lightning Network, which enables near-instant Bitcoin payments by creating off-chain payment channels between parties.
How does Submarine Swaps improve Bitcoin payments?
Submarine Swaps contributes to faster and cheaper Bitcoin transactions by enabling off-chain settlement. Lightning Network transactions typically complete in under a second with fees of fractions of a cent.
Does Onramp support Lightning Network technology?
Onramp provides educational resources on Lightning Network concepts like Submarine Swaps to help investors understand the full scope of Bitcoin's payment capabilities and scaling solutions.
