Company Name: Boltz
Founders: Kilian and Michael
Date of establishment: The project started in 2019 | Registered in 2023
Headquarters location: Far | Filed in El Salvador
Amount of Bitcoin Held in Treasury: 100% of the wealth is BTC
Number of Employees: 5
Website: https://boltz.exchange/
Public or Private? What is confidential
Exchanges sitting between Bitcoin layers can be difficult, but Boltz makes it easy.
Boltz is a non-custodial exchange that allows users to send their bitcoin between the Bitcoin base chain, the Lightning Network and the Liquid Network.
Although Boltz is now used by both users and everyday bitcoin institutions alike, the platform, which is almost as old as the Lightning Network itself, was born out of necessity and was fundamental in helping the Lightning Network function in its early days.
History of Boltz
“Boltz as a concept started in 2018,” Kilian told Bitcoin Magazine.
“I was working in lightning-based trading and I quickly realized that it was very difficult to keep the lightning channels balanced,” he added.
“Boltz was born as a band-aid to fix this, a service provider that will take care of your Lightning channel balances and keep it limited to you.”
In creating Boltz, one of the main issues that Kilian and his founding team discussed was that it needed to be non-stop to better align with the Bitcoin distribution ethos.
The mainnet of Boltz was launched in April 2019 and facilitated the Bitcoin base chain in lightning changes until the beginning of 2023, when Kilian and the other founder of Boltz, Michael, realized that Boltz needed more attention.
“We saw the weed and we thought it was very appropriate,” said Kilian.
“We decided in early 2023 to go full throttle and that the next big feature will be Liquid Swaps, which we will launch in May 2023,” he added.
It was at this time that Kilian and Michael turned Boltz into a proper business, as opposed to a passion project, which had existed until then. In doing so, they follow a new user base and experience growing pains in the process.
Liquid Swaps
“In 2023, when we started Liquid Swaps, we were targeting more professional users, especially in the case of channel balance reuse in sensitive funds. [environment],” explained Kilian. “We introduced it in time for the cost increase in May 2023.”
The cost increase that Kilian was referring to is a result of the introduction of Ordinals into the Bitcoin base chain. Bitcoin payments had reached an all-time high in late April 2023.
As payments rose to 500-600 sats/vByte, resulting in transaction fees hitting over $100 in some cases, things began to break even with Boltz feeling the heat.
“We had to shut down Boltz for three or four days,” Kilian recalled.
“Boltz was not there because we had locked up all our money in the mempool and we could not withdraw it because the money kept increasing. Many similar services have had this problem,” he added.
Kilian then revealed that Liquid is a solution for many companies facing this problem.
“If you think about a typical use case for Lightning, you can do it many times over with Liquid,” Kilian explained.
“You send with lightning, that way you get income, and you get Liquid LBTC in return. This made a lot of sense to users when we introduced it. The launch was successful, [and we] breathed a little life into the Liquid ecosystem,” he added.
Kilian also shared that Boltz’s exchange service supports Aqua Wallet, a wallet that makes Liquid to Lightning swap popular in mid-2023.
Boltz – Behind the Scenes
Aqua isn’t the only Bitcoin-related product that uses Boltz in the background.
Breez Wallet, a non-custodial Lightning wallet, was actually the first bitcoin wallet to use the Boltz exchange service.
“Sometimes Breez users want to send to a normal on-chain Bitcoin address because the merchant only accepts on-chain,” Kilian said. “Therefore, Breez has integrated our open, publicly available API to provide these changes directly within the application.”
In order for a Breez Wallet user to use some of his seats in Lightning to make on-chain purchases, he just has to scan the Bitcoin QR code and the bitcoin exchange from Lightning to the Bitcoin base chain happens in the background with Boltz.
Kilian said that Boltz plans to work with many companies to provide its service behind the scenes.
“It’s important for great UX that users don’t open our website but stay on any product/wallet [are using] then they move their bitcoin between the layers where they are,” said Kilian. “Our unofficial API is something we are pioneering and proud of.”
How Boltz Works – Atomic Swaps
According to Kilian, creating a non-maintaining service – especially one that integrates well with other non-maintaining services – was not an easy task.
As mentioned, keeping the service private was fine for Kilian and the Boltz team, partly because they didn’t want to be regulated as an organization that kept users’ funds and partly because they didn’t want users to trust intermediaries. to make a transaction.
“You don’t want to trust a random website, a random project you find on the Internet,” explains Kilian.
“We also want to be available to users who say, ‘Okay, I don’t really know them, but I hear these guys saying it’s unmaintainable. Maybe some tech guy checked that it doesn’t actually have a cell, so I’ll preach to you,’” he added.
The main technology that allows Boltz to be non-storage is Atomic Swap. And Boltz uses a subclass of Atomic Exchange called Submarine Exchange.
Submarine exchanges use time-locked contracts (HTLC), in layman’s terms, which allow two transactions (both sides of the exchange) to take place at the same time by linking them together cryptographically within a smart contract. Using this technology, there is no way for one exchange to happen without another happening at the same time.
This is the least reliable solution available to move sats between Bitcoin layers.
And in January of this year, Boltz took this technology to the next level when it powered Taproot Swaps, which helped make Lightning’s failed transaction refunds more efficient.
“Up until January, when the switch to Lightning invoice or Lightning destination failed, you had to wait until you got your refund,” Kilian said.
“That’s a mistake and ultimately bad UX. With Taproot, there is a new way you can spend coins. It’s called the ‘key method.’ And with this key method that was used, what we could actually do is we could get the money back quickly,” he added.
Kilian added that Taproot Swaps also improves privacy, as it does not reveal anything about the chain exchange.
“If a person looking at the chain looks at the chain, one cannot say that this is part of an Atomic Swap or a Boltz swap,” explained Kilian. “There’s no way to do that.”
“Privacy Respect” Solution.
After Kilian said the “P” word – privacy – I asked whether or not he was concerned that Boltz might end up at the highest level of the authorities, especially after the US Department of Justice (DoJ) faced counter-indictments. Developers of Samurai Wallet.
“I would be lying if I said that we are not worried at all because everyone is worried and everyone was very worried, especially in the first few days after the Samourai incident happened,” answered Kilian.
However, he was quick to point out that Boltz itself is not a privacy solution but a “privacy-respecting” solution.
“We can’t even compare to the solution you use for privacy,” Kilian said.
“When you exchange on Boltz, there’s only one small group that knows about incoming and outgoing payments – and that’s us. You should not trust us that we will not reveal this information to you one day,” he added.
“That being said, we respect privacy in the sense that we don’t need more information than is absolutely necessary – a physical address or a physical invoice – to do this work. We do not need your email address. And we don’t need your IP address. You can also access our service through Tor. “
The future of Boltz
Moving forward, there is one major role Kilian would like Boltz to play.
“Our idea is actually to be a bridge between the layers of Bitcoin,” he said.
“We’re seeing Bitcoin layer 2 sidechains, different types of layers are gaining traction, and this box is not going to close. This is inevitable now, and we want to be a place that connects these layers,” he added.
At the same time, Kilian stressed that Lightning will continue to be the main focus of Boltz as he considers it the “connective tissue” between the layers of Bitcoin. On that note, he mentioned that Boltz recently launched a new client that automates the rescaling of Lightning nodes.
It is clear that although Kilian and the Boltz team are open to new opportunities, they will continue to repeat what they do best.
Whatever the future holds for Boltz, Kilian has repeatedly said that it will continue to focus on being “the easiest place with the best UX that you can navigate without being tied down. [sats] between the layers of Bitcoin. “
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