Company Name: Boltz
Founders: Killian and Michael
Date of Establishment: The project started in 2019 Founded in 2023
Headquarters location: remotely | Founded in El Salvador
The amount of Bitcoin held in the vault: 100% of the treasury is BTC
Number of Employees: 5
website: https://boltz.exchange/
Public or private? private
Switching satellites between Bitcoin tiers can be difficult, but Boltz makes it easier.
Boltz It is a non-custodial exchange that allows users to send their Bitcoins between the Bitcoin main chain, the accelerator network, and the Internet. Liquid network.
While Boltz is now used by everyday Bitcoin users and institutions alike, the platform, which is almost as old as the Lightning Network itself, was born out of necessity and was key in helping the Lightning Network function in its early days.
History Boltz
“The idea for Boltz started in 2018,” Kilian told Bitcoin Magazine.
“I was working on a decentralized exchange based on Lightning and I realized very quickly that it was very difficult to keep Lightning channels balanced,” he added.
“Boltz was really born to be a bandaid to fix this problem, a service provider that takes care of your Lightning channel balances and keeps them balanced for you.”
When creating Boltz, one of the key non-negotiables that Kilian and his team created was that it should be non-custodial in order to better align with Bitcoin's decentralized ethos.
The Boltz mainnet launched in April 2019 and facilitated the Bitcoin base chain for Lightning swaps only until early 2023, when Michael and another co-founder of Boltz, realized that Boltz needed more attention.
“We saw it grow organically and felt it deserved more,” Killian said.
“We decided in early 2023 to go full-time and that the next major feature would be Liquid Swaps, which we then launched in May 2023,” he added.
It was around this time that Killian and Michael turned Boltz into a proper business, rather than a passion project, which it had been up to that point. In doing so, they sought out a new user base and faced some growing pains in the process.
Liquid swaps
“In 2023, when we started Liquid Swaps, we targeted more power users, specifically if using channel rebalancing in a fee-sensitive (environment),” Kilian explained. “We launched it during the fee hike in May 2023.”
The fee hike that Kilian referred to was a result of the introduction of Ordinals into the Bitcoin main chain. Bitcoin transaction fees reached all-time highs by late April 2023.
As fees rose to 500-600 sats/vByte, resulting in transaction fees reaching over $100 in some cases, things started to unravel, and even Boltz felt embarrassed.
“We had to close Boltz for three or four days,” Kilian recalls.
“Boltz wasn't available because we had all of our working capital locked up in the memory pool and we couldn't pump it out because the fees kept going up. A lot of similar services had this problem,” he added.
Kilian then pointed out that Liquid was the solution for many companies facing this dilemma.
“If you imagine the typical use case of getting inbound liquidity via Lightning, you can do that multiple times with Liquid,” Kilian explained.
“You send via Lightning, so you get incoming liquidity, and you get Liquid LBTC back. This made a lot of sense for users when we launched it. “The launch was a success, (and we) breathed a little life into the Liquid ecosystem,” he added.
Kilian also shared that Boltz's swap service supports Aqua walleta wallet enabling Liquid-to-Lightning swaps that became popular in mid-2023.
Boltz – behind the scenes
Aqua is not the only Bitcoin-related product that uses Boltz on the backend.
Breeze walleta non-custodial Lightning wallet, was actually the first Bitcoin wallet to use Boltz's swap service.
“Sometimes, Breez users want to send to a regular on-chain Bitcoin address because the merchant only accepts on-chain,” Kilian said. “So, Breez has integrated an open, publicly available API in order to offer these swaps directly within the app.”
In order for a Breez Wallet user to spend some of their funds on Lightning to make an on-chain purchase, they simply have to scan a Bitcoin QR code and Bitcoin is exchanged from Lightning to the Bitcoin main chain in the background via Boltz.
Kilian said Boltz plans to work with more companies to offer their services behind the scenes.
“It's important for a great user experience that users don't have to open our website but can stay in whatever product/wallet they're using and move their bitcoins between layers right where they are,” Kilian said. “Our non-custodial API is something we pioneered and are very proud of.”
How Boltz Works – Atomic Swaps
According to Kilian, creating a non-custodial service – especially one that integrates well with other non-custodial services – was no easy task.
As mentioned previously, maintaining a non-custodial service was essential for Kilian and the Boltz team, partly because they did not want to be regulated as an entity that would guard users' funds and partly because they did not want users to trust brokers to execute transactions.
“You don't want to trust a random site, or a random project you find on the Internet,” Kilian explained.
“We also want to be available to users who say, 'Well, I don't necessarily know them, but I hear these people saying it's non-custodial.'” He added, “Maybe some technical people have verified that it's actually non-custodial, so I'll give it a try.”
The main technology that enables the Boltz to be unconfined is Atomic Swap. Boltz uses a subclass of Atomic Swap called Swap submarines.
Used to swap submarines Hash Time Locked Contracts (HTLC), which, in layman's terms, enables two transactions (both sides of a swap) to occur simultaneously by linking them together cryptographically within a smart contract. Using this technology, there is no way for one exchange to occur without another occurring at the same moment.
This is the most reliable solution out there for satellite transfer between Bitcoin layers.
In January of this year, Boltz took this technology to the next level when it was enabled Root swapswhich helped make issuing refunds on failed Lightning transactions more efficient.
“Until January, when a swap to a Lightning bill or a Lightning destination failed, you had to wait until you could get your money back,” Kilian said.
“That's a drawback and ultimately a bad user experience. With Taproot, there's a new way you can spend coins. It's called the 'main path.' And with that main path spent, what we can do is essentially be able to issue refunds instantly.”
Kilian added that Taproot Swaps also improve privacy, because they don't reveal anything about the on-chain swap.
“If a chain observer looks at the chain, one cannot say that this is part of an atomic swap or even a Boltz swap,” Kilian explained. “There's no way to do that.”
A “privacy-respecting” solution.
After Killian said the “P” word — privacy — I inquired about whether or not he was concerned that Boltz would end up in the crosshairs of authorities, especially in the wake of the US Department of Justice filing charges against Boltz. Samurai Wallet Developers.
“I'd be lying if I said we weren't worried at all because everyone was worried and everyone was very worried, especially in the first two days after the samurai incident happened,” Killian replied.
However, he is quick to point out that Boltz itself is not a privacy solution but rather a “privacy-respecting” solution.
“It's in no way comparable to a coin or a solution that you use to get privacy,” Kilian said.
“When you make a swap on Boltz, there is at least one party that has information about incoming and outgoing payments – and that is us. You don’t have to trust us not to reveal this information one day,” he added.
“However, we respect privacy in the sense that we do not ask for more information than is necessary – the destination address or the destination invoice – in order to do this work. We do not need your email address. We also do not need your IP address. And you can Access our service via Tor.
Boltz's future
Moving forward, there is one major role that Killian would like Boltz to play.
“Our vision is to be the bridge between the layers of Bitcoin,” he said.
“We're seeing layer 2 sidechains of Bitcoin, and different types of layers gaining momentum, and this fund is not just going to shut down. This can't be stopped now, and we want to be the place that connects these layers,” he added.
Meanwhile, Kilian stressed that Lightning will remain Boltz's primary focus because he sees it as the “connecting fabric” between Bitcoin's layers. In this regard, it was mentioned that Boltz recently launched a new client that automates the task of rebalancing Lightning contracts.
It's clear that while Kilian and the Boltz team keep their eyes open for new opportunities, they will continue to iterate on what they do best.
Whatever the future holds for Boltz, Kilian has repeatedly said that he will continue to focus on being “the easiest place with the best user experience to move custodial-free (sats) between the layers of Bitcoin.”