So this is a interesting development in the bitcoin world.
Submarine Swaps are a Trustless forwarding of lightning transaction to on-chain recipient and vica versa.
Here the video if you want to learn more:
Or here a summary made by reddit user dmar198
The video discusses methods and application possibilities for various types of swaps, especially submarine swaps and atomic swaps. Swaps are where you trustlessly trade various types of data, including crypto-to-crypto payments (e.g. bitcoins for litecoins — swaps of this kind can be done either onchain or over lightning), onchain payments for lightning payments, lightning payments for onchain payments, and crypto payments (either kind, onchain or lightning) for torrent data.
The author also showed some demos on the testnet involving the code he has already written and is optimizing, and he shared which forms of swaps he is currently working on. The hope is that submarine swaps (both onchain-for-lightning and lightning-for-onchain) and atomic swaps (crypto-for-crypto) will both be included in LND before it gets out of beta. Based on the demos he showed, it looks very likely to me that he will finish his project in time.
The author also discussed potential applications for swap technology. Among other things, the trustless crypto-for-torrent swap (which he called an HTLCDASH swap, and which no one is currently working on, apparently) could enable trustlessly paying for downloads without ever having to worry that your counterparty might not send you the data you are paying for. The data would be divided up into chunks (like a torrent) and included in the smart contract preimage so that you pay could verify and pay for each torrent-like chunk with microtransactions, in a guaranteed and trustless way, so that it is impossible for you to pay for incorrect data.
Also, the submarine swap tech could allow exchanges to trustlessly outsource the job of onboarding people to the lightning network. So, for example, if someone wanted to withdraw bitcoins from an exchange via lightning, but the exchange doesn’t have lightning integrated internally, they could trustlessly outsource the lightning withdrawal to a swap provider — meaning they send him your payment onchain and he sends you an equivalent amount over lightning, without anyone being at risk and without the exchange having to integrate lightning. The same thing could work in reverse if you wanted to deposit over lightning — the exchange could give you an invoice created by the swap provider, and you could pay that invoice, and — trustlessly — the exchange would receive an onchain payment from the swap provider.
Exchanges could also use swap technology to trade balances with merchants. I.e. if a merchant has a channel that is depleted in the incoming direction, so that he can no longer receive payments from customers, he can trustlessly trade his depleted channel for a full one with an exchange — and thus start receiving payments again. (Exchanges hopefully won’t mind getting channels that are depleted in the incoming direction, because they need to send bitcoins “out” to their customers very often, something that merchants rarely need to do — and such channels still work for that purpose.)
He also discussed crypto-to-crypto swaps (e.g. litecoin to bitcoin and vice versa), showed some demos, and indicated that the code for paying someone over the lightning network in litecoin and having them receive bitcoin over the lightning network — without you having to do anything special — will be integrated into LND before it goes out of beta.
Lastly he shared some limitations of this technology and coding challenges that still need to be overcome. Among these, he indicated that swap providers will need to have a lot of liquidity, which is a startup challenge. Moreover, some of these swap tech applications involve onchain payments, which are slow and expensive, thus bringing some of the problems of onchain payments to lightning payments — which no one wants. He is still working on overcoming or at least minimizing these limitations, and a lot of this is still theoretical, but he did show enough practical testnet demos that it looks like the code will be ready — at least for submarine swaps and atomic swaps — by the time LND is released.
So your LN nodes can be your own mini decentralized exchange!!!!
The best part of is:
It is on main net!