Today, let's explore Boltz Exchange. I haven't used it yet, so I'm keen to take a closer look. Boltz offers the flexibility to transfer your Bitcoin across different layers, allowing for swaps between Bitcoin, Lightning, and Liquid. This provides a variety of options for managing your channel liquidity.
Key Features 🔥
- Privacy-Focused & Non-Custodial: Ensures user privacy and never holds onto your funds.
- Boltz Web App: You can access the website online or run the web app locally from the source code
- Progressive Web App: Install Boltz directly on your device, bypassing app stores.
- Boltz API & Client: For integrating Boltz swaps into your applications and managing liquidity of your CLN or LND nodes
- Refund Process Enabled by Taproot Swaps: Secure and efficient refund process.
How it works 🛠
To facilitate the trade Boltz is performing an Atomic swap and more specific Submarine Swap. If you dont know what that is, @Dathcoin wrote an hole article explaining Lightning Network Submarine Swaps, digging into different szenarios and usecases. You can check that out here.
To summarize Submarine swaps are a specific kind of atomic swap that can be performed
without custody or counterparty risk. The term atomic meens that the transactions fully completes or entirely fails without any in-between states, ensuring complete execution or no change at all.1Furthermore Boltz currently offers two types of Atomic Swaps:2
- Normal Submarine Swaps: Normal Submarine Swaps move bitcoin from the chain to Lightning. "Chain" can be the Bitcoin mainchain or, for instance, the Liquid sidechain
- Reverse Submarine Swaps: Reverse Submarine Swaps move bitcoin from Lightning to the chain. Again, "chain" can refer to the Bitcoin mainchain or, for instance, the Liquid sidechain.
Getting Started with Boltz Exchange ⚡
Imagine running a Lightning node for your business to accept payments. A challenge you might face is maintaining the balance of your channel's capacity. Typically, as you receive payments, you'll find yourself with plenty capacity to send Bitcoin but insufficient capacity to receive it. This is a common issue within the Lightning Network. It's all about keeping that balance, making sure your node can manage both incoming and outgoing transactions. At this point, @Boltz offers a solution, facilitating the rebalancing of channels by enabling the movement of Bitcoin across different layers.
To begin, visite boltz.exchange
On the navbar, you'll find a selection of options to explore. Let’s briefly go over what each one offers before we dive deeper:
This is the main page you'll use for swapping.
In case of any issues, this section allows you to upload a refund file to reclaiming your locked funds.
This part displays your past swaps saved in your browser. It also offers the option to import a backup file for record-keeping.
Following this link will take you to the documentation, offering insights on how to integrate Boltz Swaps through the public API, or how to use Boltz with clients or the Web Application.
Links to their Discord Server where you are able to get in contact.
This enables you to connect to the website via Tor.
By clicking on the in Lighting button lets you select your Asset you want to swap. You have the ability to choose between Bitcoin, Lightning and Liquid. Lets select the
Lightning option here.Now we get the chance to select the asset we want to swap to push some of the liquidity on the other side of the channel. We are able to use either Bitcoin or Liquid.
Lets select the
Liquid option here to perform a Reverse Submarine Swap which moves bitcoin from Lightning to the Liquid chain.Next we select the
amount we want to swap and enter a L-BTC address. The minimum amout to swap to Liquid are 1000 SATS. This will give you L-BTC. Currently if you want to peg out to Mainchain Bitcoin, you would need to swap back to Lightning and then from Lightning to Bitcoin. But they already working on chain swaps. So presumably there will be the option to swap Liquid to Bitcoin and vice versa soon.Congratulations! 🥳 Your swap has been successfully completed, and the L-BTC has been transferred to your wallet, with the Network Fee and Boltz Fee already deducted. Now, let's take a closer look at the fees involved.
Fees 💰
The Boltz exchange implements various fees for its swapping services. @Radentor curates an excellent Swaps Directory that outlines the fee structures of different Swap Services, including Boltz.
Here's the current fee breakdown for using Boltz:
⛓️▶️⚡ ->
₿ Chain fee + 0.1%⚡▶️⛓️ ->
₿ Chain fee + 0.5%⚡▶️💧 ->
Liquid fee + 0.25%💧▶️⚡ ->
Liquid fee + 0.1%Swapping via Liquid might save you some money when you're managing the funds for your Lightning node. But, it's worth thinking about what it means to use Liquid instead of regular Bitcoin.
Trust in the Liquid Federation 🤝
The Liquid Network is a federated sidechain designed for quicker and more private transactions. It does this through:
Fast Settlement:Moving Bitcoin to Liquid makes transactions settle within 2 minutes.Confidential Transactions:Details about the transaction, like how much and what kind of assets are moved, are kept secret.
However, unlike the Bitcoin or Lightning, which can be used non-custodially, Liquid's operations rely on a federation. This federation consists of members serving as Block Signers and Watchmen, responsible for the network's security and integrity.
Discussions 3 around Liquid often pivot on topics like security, scalability, and the souverainity you have over your funds. It's worth noting for anyone considering Liquid to improve on fees: yes, the savings could be significant, but it also means you're stepping back from having direct control over your Bitcoin. It's really up to each individual to think about if you're okay with this kind of trade-off.
Refunds 💸
Coming back to @boltz. Beginning this year @boltz exchange introduced the implementation of
Taproot Swaps. With this upgrade enabled immediate cooperative refunds, which improves an long existed UX issue. With taproot swaps users can quickly recover funds from failed Chain → Lightning swaps, eliminating the previous wait times dictated by HTLC timeouts. Additionally Taproot Swaps make Bitcoin transactions cheaper and more private. Thanks to the use of Schnorr signatures, which are smaller than traditional signatures, the transactions cost less. Also, because Taproot makes all successful swap transactions look the same on the blockchain, it's harder for others to see the specifics of what's being transacted, enhancing privacy for users. More about this hereTo use this feature you only need to
Upload your refund file and reclaim your locked funds.Unmixed CoinJoin change 🔀
One interesting use case I've explored involves using @boltz to channel your unmixed CoinJoin change outputs into the Lightning network. The primary challenge has been that, depending on the implementation (e.g., Samourai Whirlpool), there's usually a change output from the premix transaction. This change, left from splitting input UTXOs into equal amounts, is dubbed as
Bad Bank UTXOs. Mixing these requires a sufficient amount to qualify for certain pool sizes. It's crucial not to mix them with other funds or already mixed coins to maintain privacy integrity.Boltz's submarine swaps offer a solution for safely redirecting unmixed CoinJoin change into the Lightning network, thereby safeguarding the integrity of clean coins. However, it's important to note that during this process,
Boltz will be aware of the user's node public key and the specific Lightning channel the funds were directed to4,
introducing a potential privacy concern. They also outlining that maybe future integration of rendezvous routing in the Lightning network could further improve the privacy of such transactions. 5
Conclusion 🎯
Exploring Boltz Exchange has been quite interesting, showing a user-friendly platform that bridges Bitcoin's various layers with ease. Boltz comes with a privacy-first, non-custodial approach, ensuring users can swap between Bitcoin, Lightning, and Liquid without the platform ever holding their funds. This commitment aligns with the platforms ethos of
"Can't be evil" putting control firmly in users' hands.
If you're keen to learn more about the people behind @boltz, they did a great AMA here.Whether you're a merchant seeking to balance your Lightning channels or by embedding their services directly into wallets, Boltz offers tools and features to address these needs. Also the upcoming introduction of chain swaps, promising an even better experience for moving Bitcoin across layers. I've found Boltz to be a valuable resource and am eager to learn about others' experiences. Ready to explore Boltz for yourself? Head over to Boltz Exchange and start swapping.