Cross Chain Swaps: A Complete Crash Course

Each blockchain network exists in its own vacuum, severely handicapping the flow of data and digital assets between a sea of Layer-1 blockchains all competing for market share. 

The emergence of cross-chain swaps, however, looks to change the way users interact and transact between blockchains—with HoudiniSwap emerging as one of the early leaders in this key growth sector. 

Get the full scoop on cross-chain swaps and why HoudiniSwap is gaining traction in 2024.

Cross-Chain Swaps 101: The Basics

Cross-chain swaps, in essence, enable token swaps between separate blockchains. This feature enables users to facilitate payments using a specific token on another blockchain without having to use a bridge. 

This reduces the need to work with fiat as an intermediary in the process.

Here are some major use cases for cross-chain swaps:

• No bridges or CEX withdrawals needed. Sometimes, users need to buy a Layer-1 native token to pay for gas fees, but lack the assets to transact on the native token’s blockchain. This would require them to use a bridge or to transact with a centralized exchange. Cross-chain swaps enable users to swap their existing assets on another chain to receive the native token in a wallet on the latter’s blockchain.
• Streamlining the DeFi user experience. Cross-chain swaps promote a better DeFi experience by allowing users to move assets between DeFi apps on different blockchains.
• Risk mitigation. Cross-chain swaps enable users to diversify their portfolios by spreading their holdings across different blockchain ecosystems without having to jump through extra hoops that could leave them vulnerable to security incidents or blockchain outages.
• One step towards an interoperable future. Cross-chain swaps are one of the key innovations expected to play a major role in solving blockchain interoperability, creating a less fractured and more efficient ecosystem as the technology matures.

How Do Cross-Chain Swaps Work?

Current implementations of cross-chain swaps tend to rely heavily on cross-chain bridges. Bridges “wrap” and lock up tokens on a Layer-1 blockchain to recreate them on the target blockchain on a 1:1 basis. 

Most existing platforms create the infrastructure to automate and simplify this process for the end user on cross-chain bridges. All the user needs to do is to specify the cryptocurrency they wish to exchange for the one they wish to receive.

Types of Cross-Chain Swaps

The most common cross-chain swap implementations are::

• Centralized exchanges. On the other hand, using a centralized exchange offers high liquidity, competitive fees, and fast transaction speeds—but their custodial nature grants CEXes full control over user’s assets, leaving them susceptible to vulnerabilities. That’s not to mention the oodles and oodles of KYC that tie your personally-identifiable information and IP address to your wallets.
• Bridge protocols. Bridge protocols implement a “lock-and-mint” architecture, wherein tokens are locked on the source chain and an equivalent number of tokens are minted on the destination chain. Meanwhile, bridge protocols with a “burn-and-mint” architecture, burn the locked tokens on the source chain and create an equivalent number of tokens on the destination chain.
• Atomic Swaps. Atomic Swaps enable two parties to trade tokens. Each counterparty locks up the number of tokens they wish to swap on their respective underlying blockchains. Once both parties place the exact number of tokens in each smart contract, the program will unlock the assets, such that both parties receive the digital assets that were earlier locked. Although atomic swaps appear to be the most decentralized cross-chain swap option, they aren’t scalable on any major level. They also require blockchains to share the same hashing function, further limiting their scope.

While this is a long-established way of deploying cross-chain swaps, users rely solely on the security posture of the underlying cross-chain bridge to keep their assets safe. This means users essentially leverage custodial services and cede custody of their assets to intermediaries, introducing a high degree of counterparty risk to the equation.

However, HoudiniSwap is simplifying cross chain swaps and enabling users to conduct private, anonymous swaps under one platform. Let’s take a quick look at how HoudiniSwap is changing cross-chain swaps as we know them.

HoudiniSwap: Simplifying Cross Chain Swaps

HoudiniSwap’s cross-chain swap crypto feature revolutionizes the way users transfer assets between separate blockchains. 

Our platform simplifies the process of deploying cross-chain swaps without the intricacies and tedium of using direct bridging protocols—providing a seamless user experience and transfer with a superior degree of transactional privacy.

Introduction to HoudiniSwap

HoudiniSwap’s private swap, the platform doesn’t hold, transmit, or gain custody of user funds; control remains solely with its vetted partner exchanges. 

Cross-chain crypto swaps on HoudiniSwap

Prior to HoudiniSwap, privacy-focused users needed to work with crypto mixers that only hide the source address by mixing them into a big pool of transactions. 

Other methods took more intricate steps and introduced more points of failure along the process. One mistake in the process could lead to a user’s wallet address and transaction history being uncovered.

HoudiniSwap is a much safer and most importantly fully compliant option. With several types of swaps ranging from, private swap transactions (that require higher fees and tend to take anywhere from 20 to 40 minutes prior to completion) to other types with a re much faster and cheaper. 

Semi-Private Swap: Secure and efficient on HoudiniSwap 

Users interested in performing fast, efficient, affordable and above all secure cross-chain crypto swaps will be able to do so by using its Semi-Private Transaction option. 

Here’s why HoudiniSwap is the best option for private and efficient cross-chain swaps:

• High degree of privacy. Semi-private transactions cannot be traced with a single transaction hash. In essence, semi-private swaps provide the same seamless and efficient cross-chain swap while offering a higher degree of privacy compared to other methods. HoudiniSwap’s semi-private is built for speed, making them ideal for users who prefer efficiency with a higher confidentiality.
• Simpler transaction structure. Semi-private transactions only involve one exchange to work with, making them simpler, faster, and cheaper than HoudiniSwap’s private swap function. 
• Ideal for cross-change bridging. This transaction type is most often used for bridging (aka cross-chain swaps), enabling efficient asset transfers across different blockchains with a moderate degree of privacy hitherto unseen in the industry.
• Faster speeds and lower fees. Semi-private transactions are 10x faster than private swaps. This means that secure cross-chain swaps take just 2-4 minutes on HoudiniSwap, with 50% less in transaction fees compared to individuals who prefer to use private swaps. Average transaction times may vary depending on historical exchange performance and network congestion.
• 60+ supported cryptocurrencies (and counting). HoudiniSwap supports over 60 cryptocurrencies—with many more added by the day. Whatever crypto you wish to swap, you’re more than likely going to find it supported by the premier private crypto swap exchange in HoudiniSwap. 

How to perform a cross-chain swap on HoudiniSwap using 

One of the key benefits of using HoudiniSwap is its simple, intuitive user interface. Here’s how simple it is to perform a secure cross-chain swap on the platform:

Step 1: Select Semi-Private Transaction and Get a Price Quote

First, click on the “Semi Private” option to select the Semi-Private swap. Choose the digital asset you wish to swap, send, or bridge to and from. Enter the amount you wish to swap, select your desired rate (variable is usually used for most cross-chain swaps), enter the receiving address, and click on the “Semi-Private Swap” button below. No wallet connection necessary.

Step 2: Send Funds

This should bring up the following screen. Send your crypto to the address generated by HoudiniSwap. You have 30 minutes to complete this transaction, your transaction record will be deleted after 72 hours. This page will auto-refresh to show you the progress of your transaction. 

Step 3: Wait for the Transaction to Complete

Once the funds are received by the HoudiniSwap address, your funds will be converted to the target cryptocurrency, and completed shortly thereafter. HoudiniSwap will show you the average transaction time as your transaction is being processed. Average transaction times depend on current network usage rates. Semi-Private swaps, however, are 10x faster than the Private swap option.

Top 3 Cross-Chain Swap Crypto Projects

Let’s take a closer look at the leading cross-chain protocols that enable interoperability among leading blockchain networks. We’ll also take a look at how they stack up with HoudiniSwap as one of the fastest-growing solutions within the sector.

The current crop of leading cross-chain swaps include the following: 

1. Circle Protocol CCTP. Circle’s Cross-Chain Transfer Protocol (CCTP) offers users a fast, inexpensive, and highly reputable solution for cross-chain swaps. It is specifically designed to allow for the seamless transfer of USDC across multiple blockchains, ensuring robust and secure transactions.
2. Across Protocol. Across Protocol is a rising L2 bridge to Ethereum, Arbitrum, Base, and Optimism. Across offers users a new bridging architecture combining optimistic oracles, single-sided liquidity pools, and relayers to enable decentralized swaps from L2 rollups to the Ethereum network. 
3. Stargate. Stargate supports a variety of EVM-compatible L1 and L2 blockchains. Stargate features a sleek UI that allows users and applications to perform cross-chain swaps with robust liquidity pools and instant transaction finality.

Thus far, no other cross-chain swap protocol comes as close to protecting your on-chain privacy as HoudiniSwap:

• We operate as a fully non-custodial platform, ensuring users retain full control of their funds.
• Each transaction is independent, with no pooling of user funds, enhancing security and privacy.
• We carefully select exchange partners who adhere to stringent AML/ATF protocols to prevent misuse.
• Users are not charged any fees; our revenue comes from commissions paid by exchange partners.
• We geo-restrict access from OFAC-sanctioned countries.
• To discourage illicit activity, we block access via TOR and limit transactions to a maximum of $50k USD.  

In Conclusion

Cross-chain swaps enable direct value exchange and data between disparate blockchains. They offer a more private, secure, and seamless way to manage their affairs across various blockchains. The interest in the sector mirrors the rapidly-evolving blockchain industry as more and more individuals are onboarded to the crypto ecosystem.

If you want the top of the line solution – make sure to try HoudiniSwap!