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How Do Hash Time-Locked Contracts (HTLCs) Ensure Trustlessness in an Atomic Swap?

HTLCs use a shared secret (hashlock) and a time limit (timelock) to ensure an all-or-nothing exchange.
Greeks.Live06.11.25

How Do Hash Time-Locked Contracts (HTLCs) Ensure Trustlessness in an Atomic Swap?

HTLCs require both parties to create a cryptographic hashlock and a timelock. Party A sends funds locked by a secret key's hash.

Party B sends funds locked by the same hash. To claim Party A's funds, Party B must reveal the secret key.

Once revealed, Party A can use that same key to claim Party B's funds. The timelock ensures funds are returned if the swap is not completed within a set time.

This eliminates counterparty risk.

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