Submarine Swaps

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.