Whale’s Exchange, a decentralized exchange (DEX), has joined the ecosystem with an interesting proposition. This proposal has generated buzz both on the technical side and in recent interactions with the Electrum team regarding the implementation of underwater exchanges (submarine exchange).
Through a post on X, the Boltz team introduced Whale’s Exchange on April 26 of this year as a platform focused on simplicity and financial sovereignty. Unlike centralized exchanges, this site does not require any registration or Know Your Customer process (KYC). Users will be able to operate directly from their wallets. “Try it, find bugs, and help us improve!” This statement reminds us that this is open source development.
What does Whale’s Exchange offer?
When you visit their website, you will be presented with a minimalist interface specifically designed to facilitate exchanges. The service leverages the infrastructure of Voltz, an atomic swap protocol, and uses the Electrum implementation to manage smart contracts that ensure transaction safety and non-custodiality.
first version of The platform is specialized only for reverse trading (reverse swap). Additionally, the developer warns, “Use only as much as you can afford to lose,” reminding us that a certain number of bugs are to be expected in beta versions, even if they are bug-free.
But what is a reverse exchange?
In the Bitcoin space, there are two main types of underwater transactions (submarine exchange):
- Regular exchange: user sends Bitcoin On-chain Receive SATOSHI on your Lightning Network channel. Ideally, it would replenish liquidity.
- Reverse swap: It is a reverse process. The user sends the payment via the Lightning Network and sends the payment via the main chain address (On-chain).
This method is especially useful for users who have accumulated large amounts of funds in Lightning and want to move them to Lightning.be without going through cold wallets or centralized exchanges. “Atomicity” makes it impossible for either party to deceive the other. If the exchange is not fully completed, the funds will be returned to the original owner through a time-lock contract (HTLC).
Technical discussions have already begun
The launch was accompanied by a preliminary discussion. Through the official Whales Secret account of the exchange developer, X. Made some observations about the current status of the Electrum code This allows you to perform atomic exchanges.
I checked the Electrum code for a direct replacement and unfortunately found this. In the old flow, I could easily implement support for direct exchange, but since I don’t have control over the user’s LN wallet, I don’t know how to do it in the new flow. Any ideas or possibilities to re-enable support for old streams on the server?
whale secret
The response from the Electrum team was immediate, pointing out the importance of this development to the network. The team behind one of the oldest and most respected Bitcoin wallets clarified: “The old method has been removed because the server may not be able to find the route for the LN payment. In that case, the user will need to receive a refund (locked funds + mining fees) on-chain. The new method is not supported with bolt11 invoices. A wallet that supports invoice retention is required.”
The Whale’s Exchange team then commented that they determined that the previous flow could cause the server to reject the exchange, and the new flow could cause the reverse exchange to fail and the user to lose funds. The Electrum team quickly came forward and said, “If the server is using our protocol (rather than Boltz), the invoices are grouped together so users don’t lose fees due to a failed reverse exchange.”
The discussion ended as follows. The Electrum team invited you to continue the discussion on GitHub. It reminds us that social media is completely impractical for that kind of conversation.
For advanced users who want to move funds from Lightning to the main chain while ensuring privacy, Whale’s Exchange is an interesting alternative, as long as you keep in mind that it is a standalone, early-stage tool.
