Submarine Swap

A submarine swap is an atomic swap between on-chain Bitcoin and Lightning Bitcoin. It lets you move BTC across the layer boundary trustlessly, without going through a custodian and without closing or opening a Lightning channel.

Two directions:

• Submarine swap in. You have on-chain BTC; you want Lightning BTC (e.g., to fund inbound liquidity on a Lightning channel, or to pay a Lightning invoice without first opening a channel). The swap service receives your on-chain transaction and sends you Lightning BTC.
• Submarine swap out. You have Lightning BTC; you want it on-chain (e.g., to withdraw to cold storage). The swap service sends you on-chain BTC after you complete a Lightning payment.

Both directions use HTLCs on each side to enforce atomicity: the service can't take your BTC and not send the other side. If anything goes wrong, the timeouts kick in and you get refunded.

Why this matters in practice:

• Lightning inbound liquidity. Opening a Lightning channel funds your side by default; the other side starts at zero. Submarine swaps are a clean way to "buy" inbound liquidity without closing and reopening.
• Trust-minimized off-ramps. Get Lightning balance back to on-chain cold storage without trusting an exchange.
• Lightning-to-Lightning across implementations. Useful when network conditions or liquidity issues make direct routing unreliable.

Notable services: Lightning Loop (Lightning Labs), Boltz Exchange (open-source, multi-chain), and various wallet-integrated swap features. The service charges a small fee plus the on-chain transaction cost; in return you get cross-layer movement without custody risk.