Chainflip swaps: how deposits become native-asset payouts

Chainflip moves a deposit on one blockchain into a native asset payout on another by recording the swap on its State Chain and settling it through protocol-controlled vaults. A user chooses the source and destination assets, amount, and payout address, then sends funds to a deposit channel or calls a vault contract. The chainflip design separates the trading record from the assets: the State Chain tracks the swap, while vaults hold the actual coins on their own networks.

For a typical deposit-channel swap, a broker registers the user’s request and provides a deposit address. It can also pay the State Chain transaction fee on the user’s behalf, and may charge a commission. Chainflip’s site, chainflip, is one place to see how the protocol describes its service. The user sends the source asset to the channel, with the destination address and swap details attached to the registered request.

How does a chainflip swap move between blockchains?

Validators watch supported chains for deposits to open channels and for calls to vault contracts. When a transfer meets the source chain’s confirmation requirements, validators witness it and record it on the State Chain. That record tells the protocol which swap to process and which destination address should receive the result. It does not itself move the coins on either chain.

The State Chain then processes swaps against the Just-in-Time automated market maker, or JIT AMM. Its liquidity is represented as balances on the State Chain rather than as separate pools of wrapped tokens on each source network. Liquidity providers can bid on incoming swaps; the protocol combines eligible swaps in a block and calculates the output from available liquidity. A route may pass through more than one pool, such as BTC to USDC and then USDC to ETH.

When processing finishes, the State Chain records a pending payout. Validators use threshold signatures: multiple members jointly produce the signature needed for a valid transaction, without any one validator holding the complete signing key. The network broadcasts the transaction from its vault on the destination chain. The recipient gets that chain’s native asset, subject to the destination network confirming the payout.

What fees does a Chainflip swap charge?

A Chainflip swap can include several distinct costs. The source-chain transfer costs the user gas or a transaction fee. Each pool used in the route charges a liquidity fee, with the rate set by that pool. The protocol also charges a network fee, deducted during swap processing when the route reaches a USDC-denominated stage.

• Source-chain fee: paid to send the deposit and varies by chain and network conditions.
• Liquidity fee: charged by each pool used; published protocol documentation lists pool fees in the 0.10% to 0.15% range.
• Network fee: the documented standard rate is 0.10%, with a lower rate for internal stablecoin swaps and a minimum charge. It funds the protocol’s FLIP buy-and-burn mechanism.
• Destination broadcast fee: deducted from the output to cover the cost of sending the payout. It varies by destination chain, and batching transactions can reduce the per-swap cost.

The quoted output therefore depends on the route, pool liquidity, and chain fees, not just the amount sent. If a swap cannot complete, a refund may incur a fee and still needs a destination-chain transaction. Users should check the minimum accepted price or other price protection settings when available; these can prevent execution below a chosen threshold, but may leave a deposit waiting or lead to a refund if the condition is not met.

What does settlement mean in Chainflip?

Settlement is the step that turns the State Chain’s accounting result into an actual transaction on the destination network. The State Chain does not teleport or wrap the deposited asset. Chainflip’s validators jointly control vaults on supported chains, hold the deposited assets there, and sign outbound transactions according to recorded swap instructions.

This arrangement avoids issuing a wrapped version of the destination asset for the user to redeem later. It also means that a completed trade still depends on the validator network’s ability to witness deposits and authorize vault transactions. The useful distinction is simple: the State Chain calculates who is owed what; the vaults and validators deliver it on the relevant blockchains. When comparing a route, look at the expected output after all fees and the settlement path, rather than treating the pool price as the final amount.