Cross-Chain Swaps Explained
Simplified mechanism for cross-chain swaps - smart contracts only
Cross chain swaps are a core feature of PACT SWAP. In simple terms, they allow users to swap assets across chains, which are seemingly incompatible. For example: A user can swap 1 Bitcoin for the equivalent amount of BNB Token on Binance Smart Chain.
Most popular attempts are to circumvent the cross-chain restrictions by using bridges and wrapped tokens, such as wBTC (wrapped BTC) on EVM compatible chains. The overhead for the UX, transparency and user funds security is significant.
Introducing Coinweb's PACT framework, PACT SWAP allows users to swap assets across connected chains, without the need for additional consensus layers. Literally just native transactions on different blockchains, directly from the user's wallet to the user's wallet.
High level overview
In practical terms, PACT SWAP allows users to swap assets based only on Layer 1 transactions.
Outgoing swap transaction, chain X
User sends funds directly from his wallet to the destination address of the counterparty, provided from order matching. Only the native chain's transaction fees are paid.
No hidden costs, just native L1 transactions.
PACT enforced obligation
Counter party is forced to fulfill its obligation by sending swapped funds back to the user, generally eliminating counterparty risk by over-collateralizing the orders. Its either fulfill or lose the collateral (twice the amount).
No validators, no bridges, no 3rd party intermediaries, no additional consensus layers - just smart contract logic.
Incoming swap transaction, chain Y
Counter party sends funds directly to the user's wallet, provided from order matching. Only the native chain's transaction fees are paid.
No hidden costs, just native L1 transactions.
No validators, no bridges, no intermediaries, no hidden costs - just native L1 transactions.
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