What Is an Atomic Swap?
An atomic swap is a mechanism that allows for direct peer-to-peer trading of cryptocurrencies without a centralized exchange.
Unlike traditional exchanges, atomic swaps are decentralized and enable wallet-to-wallet trading using specially designed smart contracts.
Atomic swaps are based on hash timelock contracts (HTLC).
Each HTLC includes a hash lock, which locks and unlocks the deposited currency with a key known only to the depositor, and a timelock, automatically returns the funds to the depositor if the transaction is not completed within a specified timeframe.
Secure Cross-Chain Trading with Guaranteed Outcomes
With atomic swaps, when a swap occurs, either both parties receive the desired funds, or nothing happens, and both parties retain their original funds (minus a small transaction fee for the “order-taker”).
Atomic swaps provide a high level of security for digital asset trading.
Atomic swaps can be used for on-chain trading across blockchains with native coins.
The technology is protocol agnostic, allowing for asset swaps between cryptocurrencies.
Off-chain atomic swaps offer faster transaction speeds, although they are still under development.