Submarine swaps are a way to move funds from an on-chain to an off-chain address (and vice versa) directly in one step. Without submarine swap technology, two steps are required to move funds on and off-chain, as follows:
- Move funds from on-chain source (i.e. an exchange or a different Bitcoin address) to an off-chain enabled wallet (i.e. a Lightning Network enabled wallet) (or vice versa).
- Move funds inside the Lightning Network enabled wallet from on-chain to off-chain (or vice versa).
Submarine swaps only require one side of the transaction to be connected to the Lightning Network. Several use cases exist for submarine swaps, the most important of which is buying / receiving Bitcoin to a Lightning Network enabled wallet directly from the Bitcoin blockchain.