How Atomic Swaps Actually Work — and Why Stabull Fits Them So Well

By Jamie McCormick, Co-CMO, Stabull Labs

The fourteenth article in the 15 part “Deconstructing DeFi” Series.

⸻

Specifically, we’ll explain atomic swaps in a DeFi context, why they are foundational to modern execution, and why Stabull’s design makes it particularly well-suited to being used inside them.

What “atomic” really means

In DeFi, an atomic transaction is one that either:

• completes in full, or
• does not happen at all

There is no partial completion.

Every step inside the transaction is executed as a single unit. If any step fails — insufficient liquidity, excessive slippage, price movement, or a revert — the entire transaction is rolled back as if it never occurred.

From the perspective of the user or protocol initiating the transaction:

• funds are never left mid-route
• no intermediate exposure exists
• no clean-up is required

This property is critical for automated systems operating at scale.

A simplified end-to-end example

To make this concrete, imagine a solver attempting to execute the following trade:

1. Start with ETH
2. Convert ETH → USDC
3. Convert USDC → EUR-denominated stablecoin
4. Convert back into a different crypto asset
5. Settle the final asset to the user

All of those steps are bundled into one atomic transaction.

If step 3 fails — because pricing is off, liquidity is unavailable, or slippage exceeds tolerance — steps 1, 2, 4, and 5 never occur.

This guarantees correctness, but it also places very strict requirements on every venue involved.

Why atomic swaps are hard

Atomic execution is unforgiving.

For a pool to be usable inside an atomic swap, it must:

• price predictably
• execute within tight slippage bounds
• avoid reverts
• behave consistently across blocks

Many pools fail these tests intermittently — especially during volatility.

When that happens, solvers stop routing through them.

Where Stabull fits

Stabull pools are designed around oracle-anchored pricing, rather than relying solely on pool balances to determine price.

That has several important consequences inside atomic execution:

• Prices stay aligned with off-chain reference rates
• Short-term imbalance does not create large price swings
• Execution is less sensitive to momentary liquidity skew

For atomic swaps, this stability matters more than depth.

Solvers are often willing to accept slightly higher fees or smaller trade sizes in exchange for lower failure risk.

That trade-off is exactly where Stabull becomes attractive.

Stabull as a mid-path execution leg

In many of the transactions we traced, Stabull was not the start or end of the trade.

Instead, it appeared in the middle:

• as an FX conversion step
• as a stable pricing anchor
• as a bridge between volatile assets

This “mid-path” role is particularly powerful.

It means Stabull pools are:

• reused across many different strategies
• touched even when the end user never interacts with Stabull directly
• valued for correctness rather than speculation

Each time an atomic swap chooses a Stabull pool for one leg, it pays swap fees — quietly, predictably, and repeatedly.

Why this drives non-UI volume

Atomic swaps are almost never initiated through a project’s own UI.

They are:

• assembled by solvers
• triggered by aggregators
• executed by bots

This explains why volume can grow significantly without any corresponding increase in UI traffic.

Once Stabull pools are included in atomic execution logic, they can be used hundreds or thousands of times per day without a single user “clicking” through Stabull itself.

Risk profile for LPs

From an LP perspective, atomic execution changes the risk profile in subtle but important ways.

LPs are not exposed to:

• long-lived positions
• open credit risk
• borrower default

Instead, liquidity is:

• touched briefly
• used deterministically
• returned immediately

The primary risk remains market risk inherent to providing liquidity, but execution risk is reduced because trades either complete cleanly or do not happen at all.

Why this behaviour scales

Atomic swaps scale naturally as DeFi becomes more composable.

As more protocols:

• integrate aggregators
• rely on solvers
• automate treasury and execution logic

The number of atomic transactions increases.

Each one needs reliable execution legs.

That is the role Stabull is increasingly playing.

The quiet compounding effect

Atomic swaps don’t arrive as dramatic spikes.

They arrive as:

• thousands of small decisions made by software
• repeated selections of “the pool that works”
• steady background usage

This is why the growth pattern looks gradual, then accelerating.

By the time volume becomes obvious, the underlying logic has already locked in.

Looking ahead

In the next article, we’ll tie everything together and look at why this behaviour creates a different growth trajectory for Stabull — one driven by integration and usage rather than campaigns or speculation.

About the Author

Jamie McCormick is Co-Chief Marketing Officer at Stabull Finance, where he has been working for over two years on positioning the protocol within the evolving DeFi ecosystem.

He is also the founder of Bitcoin Marketing Team, established in 2014 and recognised as Europe’s oldest specialist crypto marketing agency. Over the past decade, the agency has worked with a wide range of projects across the digital asset and Web3 landscape.

Jamie first became involved in crypto in 2013 and has a long-standing interest in Bitcoin and Ethereum. Over the last two years, his focus has increasingly shifted toward understanding the mechanics of decentralised finance, particularly how on-chain infrastructure is used in practice rather than in theory.