How Native Cross-Chain Swaps Work Without Wrapped Tokens

Chainflip swaps native assets by depositing them into vaults on their own chains, recording the trade on its State Chain and paying out from destination-chain reserves; no wrapped token is minted. Its protocol documentation describes this model as separate custody and settlement on each network, coordinated by a shared layer that handles swap accounting and pricing.

That changes where the risk sits. A wrapped-token holder depends on the issuer or bridge to hold reserves and honour redemption; with a native swap, the protocol’s vault controls and validators must safely receive and release the actual assets. For a fuller account of how Chainflip’s exchange coordinates native swaps, see the linked explainer; the core idea is that the trade can happen without an intermediate token.

How does a swap move assets between chains?

The protocol receives the input asset on its home chain, executes the trade against liquidity, then broadcasts a payout on the destination chain. Chainflip’s documentation says users register the swap details, including the destination asset and address, before sending funds; the network witnesses the deposit and records it on the State Chain.

The State Chain tracks balances and swap execution, while the actual assets remain in vaults on their respective chains. Its Just-in-Time automated market maker prices swaps against liquidity providers’ available capital. If a route needs an intermediate asset, the protocol can make multiple trades internally; the user still receives the requested destination asset.

• The user specifies the input asset, destination asset and payout address.
• The source-chain deposit is witnessed and recorded by the protocol.
• The State Chain executes the swap against available liquidity.
• Validators sign and broadcast a transfer from the destination-chain vault.

Why are wrapped tokens unnecessary?

A swap does not need to represent Bitcoin as an Ethereum token or issue another synthetic claim. Instead, the protocol coordinates a deposit of native Bitcoin with a payout of native ETH, using reserves held on each chain. Chainflip’s protocol overview describes its market as virtual: accounting happens on the State Chain, while settlement uses assets held in native-chain vaults.

This removes the wrapped asset’s redemption step and its separate peg to the underlying coin. It does not remove trust or security assumptions: users rely on the protocol’s validator set, vault controls and operational rules to authorize deposits and payouts. A native asset can still be lost if those controls fail.

What are the trade-offs for users?

Native swaps avoid holding a bridge-issued token after the transaction, but depend on liquidity being available for the chosen route. Chainflip’s documentation says swap output is affected by liquidity fees, network fees and the route through its pools; a route with multiple pools can incur fees at each step. The received amount may therefore differ from a simple market-price conversion.

Before sending funds, check that the protocol supports both assets and the destination chain, enter the right payout address, and review the quoted output and fees. The protocol’s docs warn that funds sent straight to its vaults without registering a swap may not be recognized. The next step is the protocol’s own: it witnesses the deposit, executes the trade, then broadcasts the destination payout.