diff --git a/Cargo.lock b/Cargo.lock
index 4761c859f8839..49d06d9a67eef 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -3845,6 +3845,21 @@ dependencies = [
  "sp-std",
 ]
 
+[[package]]
+name = "pallet-atomic-swap"
+version = "2.0.0-rc3"
+dependencies = [
+ "frame-support",
+ "frame-system",
+ "pallet-balances",
+ "parity-scale-codec",
+ "serde",
+ "sp-core",
+ "sp-io",
+ "sp-runtime",
+ "sp-std",
+]
+
 [[package]]
 name = "pallet-aura"
 version = "2.0.0-rc3"
diff --git a/Cargo.toml b/Cargo.toml
index d3004fcadca5a..d1c7339b993fd 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -60,6 +60,7 @@ members = [
 	"utils/wasm-builder-runner",
 	"frame/assets",
 	"frame/aura",
+	"frame/atomic-swap",
 	"frame/authority-discovery",
 	"frame/authorship",
 	"frame/babe",
diff --git a/bin/node/runtime/src/lib.rs b/bin/node/runtime/src/lib.rs
index d776d72e2b4cf..d5773d7941c6e 100644
--- a/bin/node/runtime/src/lib.rs
+++ b/bin/node/runtime/src/lib.rs
@@ -96,8 +96,8 @@ pub const VERSION: RuntimeVersion = RuntimeVersion {
 	// and set impl_version to 0. If only runtime
 	// implementation changes and behavior does not, then leave spec_version as
 	// is and increment impl_version.
-	spec_version: 252,
-	impl_version: 1,
+	spec_version: 253,
+	impl_version: 0,
 	apis: RUNTIME_API_VERSIONS,
 	transaction_version: 1,
 };
diff --git a/frame/atomic-swap/Cargo.toml b/frame/atomic-swap/Cargo.toml
new file mode 100644
index 0000000000000..be197096e7727
--- /dev/null
+++ b/frame/atomic-swap/Cargo.toml
@@ -0,0 +1,39 @@
+[package]
+name = "pallet-atomic-swap"
+version = "2.0.0-rc3"
+authors = ["Parity Technologies <admin@parity.io>"]
+edition = "2018"
+license = "Apache-2.0"
+homepage = "https://substrate.dev"
+repository = "https://github.com/paritytech/substrate/"
+description = "FRAME atomic swap pallet"
+
+[package.metadata.docs.rs]
+targets = ["x86_64-unknown-linux-gnu"]
+
+[dependencies]
+serde = { version = "1.0.101", optional = true }
+codec = { package = "parity-scale-codec", version = "1.3.0", default-features = false }
+frame-support = { version = "2.0.0-rc3", default-features = false, path = "../support" }
+frame-system = { version = "2.0.0-rc3", default-features = false, path = "../system" }
+sp-runtime = { version = "2.0.0-rc3", default-features = false, path = "../../primitives/runtime" }
+sp-std = { version = "2.0.0-rc3", default-features = false, path = "../../primitives/std" }
+sp-io = { version = "2.0.0-rc3", default-features = false, path = "../../primitives/io" }
+sp-core = { version = "2.0.0-rc3", default-features = false, path = "../../primitives/core" }
+
+[dev-dependencies]
+pallet-balances = { version = "2.0.0-rc3", default-features = false, path = "../balances" }
+
+[features]
+default = ["std"]
+std = [
+	"serde",
+	"codec/std",
+	"frame-support/std",
+	"frame-system/std",
+	"sp-runtime/std",
+	"sp-std/std",
+	"sp-io/std",
+	"sp-core/std",
+	"pallet-balances/std",
+]
diff --git a/frame/atomic-swap/src/lib.rs b/frame/atomic-swap/src/lib.rs
new file mode 100644
index 0000000000000..aa33c9a849fff
--- /dev/null
+++ b/frame/atomic-swap/src/lib.rs
@@ -0,0 +1,248 @@
+// This file is part of Substrate.
+
+// Copyright (C) 2017-2020 Parity Technologies (UK) Ltd.
+// SPDX-License-Identifier: Apache-2.0
+
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+//
+// 	http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+//! # Atomic swap support pallet
+
+// Ensure we're `no_std` when compiling for Wasm.
+#![cfg_attr(not(feature = "std"), no_std)]
+
+mod tests;
+
+use sp_std::prelude::*;
+use sp_io::hashing::blake2_256;
+use frame_support::{
+	decl_module, decl_storage, decl_event, decl_error, ensure,
+	traits::{Get, Currency, ReservableCurrency, BalanceStatus},
+	weights::Weight,
+	dispatch::DispatchResult,
+};
+use frame_system::{self as system, ensure_signed};
+use codec::{Encode, Decode};
+use sp_runtime::RuntimeDebug;
+
+/// Pending atomic swap operation.
+#[derive(Clone, RuntimeDebug, Eq, PartialEq, Encode, Decode)]
+pub struct PendingSwap<AccountId, Balance, BlockNumber> {
+	/// Source of the swap.
+	pub source: AccountId,
+	/// Balance value of the swap.
+	pub balance: Balance,
+	/// End block of the lock.
+	pub end_block: BlockNumber,
+}
+
+/// Balance type from the pallet's point of view.
+pub type BalanceFor<T> = <<T as Trait>::Currency as Currency<<T as frame_system::Trait>::AccountId>>::Balance;
+
+/// AccountId type from the pallet's point of view.
+pub type AccountIdFor<T> = <T as frame_system::Trait>::AccountId;
+
+/// BlockNumber type from the pallet's point of view.
+pub type BlockNumberFor<T> = <T as frame_system::Trait>::BlockNumber;
+
+/// PendingSwap type from the pallet's point of view.
+pub type PendingSwapFor<T> = PendingSwap<AccountIdFor<T>, BalanceFor<T>, BlockNumberFor<T>>;
+
+/// Hashed proof type.
+pub type HashedProof = [u8; 32];
+
+/// Atomic swap's pallet configuration trait.
+pub trait Trait: frame_system::Trait {
+	/// The overarching event type.
+	type Event: From<Event<Self>> + Into<<Self as frame_system::Trait>::Event>;
+	/// The currency mechanism.
+	type Currency: ReservableCurrency<Self::AccountId>;
+	/// Limit of proof size.
+	///
+	/// Atomic swap is only atomic if once the proof is revealed, both parties can submit the proofs
+	/// on-chain. If A is the one that generates the proof, then it requires that either:
+	/// - A's blockchain has the same proof length limit as B's blockchain.
+	/// - Or A's blockchain has shorter proof length limit as B's blockchain.
+	///
+	/// If B sees A is on a blockchain with larger proof length limit, then it should kindly refuse
+	/// to accept the atomic swap request if A generates the proof, and asks that B generates the
+	/// proof instead.
+	type ProofLimit: Get<u32>;
+}
+
+decl_storage! {
+	trait Store for Module<T: Trait> as AtomicSwap {
+		pub PendingSwaps: double_map
+			hasher(twox_64_concat) T::AccountId, hasher(blake2_128_concat) HashedProof
+			=> Option<PendingSwapFor<T>>;
+	}
+}
+
+decl_error! {
+	pub enum Error for Module<T: Trait> {
+		/// Swap already exists.
+		AlreadyExist,
+		/// Swap proof is invalid.
+		InvalidProof,
+		/// Proof is too large.
+		ProofTooLarge,
+		/// Source does not match.
+		SourceMismatch,
+		/// Swap has already been claimed.
+		AlreadyClaimed,
+		/// Swap does not exist.
+		NotExist,
+		/// Duration has not yet passed for the swap to be cancelled.
+		DurationNotPassed,
+	}
+}
+
+decl_event!(
+	/// Event of atomic swap pallet.
+	pub enum Event<T> where
+		Balance = BalanceFor<T>,
+		AccountId = AccountIdFor<T>,
+		PendingSwap = PendingSwapFor<T>,
+	{
+		/// Swap created.
+		NewSwap(AccountId, HashedProof, PendingSwap),
+		/// Swap claimed. The last parameter indicates whether the execution succeeds.
+		SwapClaimed(AccountId, HashedProof, Balance, bool),
+		/// Swap cancelled.
+		SwapCancelled(AccountId, HashedProof),
+	}
+);
+
+decl_module! {
+	/// Module definition of atomic swap pallet.
+	pub struct Module<T: Trait> for enum Call where origin: T::Origin {
+		type Error = Error<T>;
+
+		fn deposit_event() = default;
+
+		/// Register a new atomic swap, declaring an intention to send funds from origin to target
+		/// on the current blockchain. The target can claim the fund using the revealed proof. If
+		/// the fund is not claimed after `duration` blocks, then the sender can cancel the swap.
+		///
+		/// The dispatch origin for this call must be _Signed_.
+		///
+		/// - `target`: Receiver of the atomic swap.
+		/// - `hashed_proof`: The blake2_256 hash of the secret proof.
+		/// - `balance`: Funds to be sent from origin.
+		/// - `duration`: Locked duration of the atomic swap. For safety reasons, it is recommended
+		///   that the revealer uses a shorter duration than the counterparty, to prevent the
+		///   situation where the revealer reveals the proof too late around the end block.
+		#[weight = T::DbWeight::get().reads_writes(1, 1).saturating_add(40_000_000)]
+		fn create_swap(
+			origin,
+			target: AccountIdFor<T>,
+			hashed_proof: HashedProof,
+			balance: BalanceFor<T>,
+			duration: BlockNumberFor<T>,
+		) {
+			let source = ensure_signed(origin)?;
+			ensure!(
+				!PendingSwaps::<T>::contains_key(&target, hashed_proof),
+				Error::<T>::AlreadyExist
+			);
+
+			T::Currency::reserve(&source, balance)?;
+
+			let swap = PendingSwap {
+				source,
+				balance,
+				end_block: frame_system::Module::<T>::block_number() + duration,
+			};
+			PendingSwaps::<T>::insert(target.clone(), hashed_proof.clone(), swap.clone());
+
+			Self::deposit_event(
+				RawEvent::NewSwap(target, hashed_proof, swap)
+			);
+		}
+
+		/// Claim an atomic swap.
+		///
+		/// The dispatch origin for this call must be _Signed_.
+		///
+		/// - `proof`: Revealed proof of the claim.
+		#[weight = T::DbWeight::get().reads_writes(2, 2)
+		  .saturating_add(40_000_000)
+		  .saturating_add((proof.len() as Weight).saturating_mul(100))
+		]
+		fn claim_swap(
+			origin,
+			proof: Vec<u8>,
+		) -> DispatchResult {
+			ensure!(
+				proof.len() <= T::ProofLimit::get() as usize,
+				Error::<T>::ProofTooLarge,
+			);
+
+			let target = ensure_signed(origin)?;
+			let hashed_proof = blake2_256(&proof);
+
+			let swap = PendingSwaps::<T>::get(&target, hashed_proof)
+				.ok_or(Error::<T>::InvalidProof)?;
+
+			let succeeded = T::Currency::repatriate_reserved(
+				&swap.source,
+				&target,
+				swap.balance,
+				BalanceStatus::Free,
+			).is_ok();
+
+			PendingSwaps::<T>::remove(target.clone(), hashed_proof.clone());
+
+			Self::deposit_event(
+				RawEvent::SwapClaimed(target, hashed_proof, swap.balance, succeeded)
+			);
+
+			Ok(())
+		}
+
+		/// Cancel an atomic swap. Only possible after the originally set duration has passed.
+		///
+		/// The dispatch origin for this call must be _Signed_.
+		///
+		/// - `target`: Target of the original atomic swap.
+		/// - `hashed_proof`: Hashed proof of the original atomic swap.
+		#[weight = T::DbWeight::get().reads_writes(1, 1).saturating_add(40_000_000)]
+		fn cancel_swap(
+			origin,
+			target: AccountIdFor<T>,
+			hashed_proof: HashedProof,
+		) {
+			let source = ensure_signed(origin)?;
+
+			let swap = PendingSwaps::<T>::get(&target, hashed_proof)
+				.ok_or(Error::<T>::NotExist)?;
+			ensure!(
+				swap.source == source,
+				Error::<T>::SourceMismatch,
+			);
+			ensure!(
+				frame_system::Module::<T>::block_number() >= swap.end_block,
+				Error::<T>::DurationNotPassed,
+			);
+
+			T::Currency::unreserve(
+				&swap.source,
+				swap.balance,
+			);
+			PendingSwaps::<T>::remove(&target, hashed_proof.clone());
+
+			Self::deposit_event(
+				RawEvent::SwapCancelled(target, hashed_proof)
+			);
+		}
+	}
+}
diff --git a/frame/atomic-swap/src/tests.rs b/frame/atomic-swap/src/tests.rs
new file mode 100644
index 0000000000000..72db841de19df
--- /dev/null
+++ b/frame/atomic-swap/src/tests.rs
@@ -0,0 +1,155 @@
+#![cfg(test)]
+
+use super::*;
+
+use frame_support::{
+	impl_outer_origin, parameter_types, weights::Weight,
+};
+use sp_core::H256;
+// The testing primitives are very useful for avoiding having to work with signatures
+// or public keys. `u64` is used as the `AccountId` and no `Signature`s are required.
+use sp_runtime::{
+	Perbill,
+	testing::Header,
+	traits::{BlakeTwo256, IdentityLookup},
+};
+
+impl_outer_origin! {
+	pub enum Origin for Test where system = frame_system {}
+}
+
+// For testing the pallet, we construct most of a mock runtime. This means
+// first constructing a configuration type (`Test`) which `impl`s each of the
+// configuration traits of pallets we want to use.
+#[derive(Clone, Eq, PartialEq)]
+pub struct Test;
+parameter_types! {
+	pub const BlockHashCount: u64 = 250;
+	pub const MaximumBlockWeight: Weight = 1024;
+	pub const MaximumBlockLength: u32 = 2 * 1024;
+	pub const AvailableBlockRatio: Perbill = Perbill::one();
+}
+impl frame_system::Trait for Test {
+	type BaseCallFilter = ();
+	type Origin = Origin;
+	type Index = u64;
+	type BlockNumber = u64;
+	type Hash = H256;
+	type Call = ();
+	type Hashing = BlakeTwo256;
+	type AccountId = u64;
+	type Lookup = IdentityLookup<Self::AccountId>;
+	type Header = Header;
+	type Event = ();
+	type BlockHashCount = BlockHashCount;
+	type MaximumBlockWeight = MaximumBlockWeight;
+	type DbWeight = ();
+	type BlockExecutionWeight = ();
+	type ExtrinsicBaseWeight = ();
+	type MaximumExtrinsicWeight = MaximumBlockWeight;
+	type MaximumBlockLength = MaximumBlockLength;
+	type AvailableBlockRatio = AvailableBlockRatio;
+	type Version = ();
+	type ModuleToIndex = ();
+	type AccountData = pallet_balances::AccountData<u64>;
+	type OnNewAccount = ();
+	type OnKilledAccount = ();
+}
+parameter_types! {
+	pub const ExistentialDeposit: u64 = 1;
+}
+impl pallet_balances::Trait for Test {
+	type Balance = u64;
+	type DustRemoval = ();
+	type Event = ();
+	type ExistentialDeposit = ExistentialDeposit;
+	type AccountStore = System;
+}
+parameter_types! {
+	pub const ProofLimit: u32 = 1024;
+	pub const ExpireDuration: u64 = 100;
+}
+impl Trait for Test {
+	type Event = ();
+	type Currency = Balances;
+	type ProofLimit = ProofLimit;
+}
+type System = frame_system::Module<Test>;
+type Balances = pallet_balances::Module<Test>;
+type AtomicSwap = Module<Test>;
+
+const A: u64 = 1;
+const B: u64 = 2;
+
+pub fn new_test_ext() -> sp_io::TestExternalities {
+	let mut t = frame_system::GenesisConfig::default().build_storage::<Test>().unwrap();
+	let genesis = pallet_balances::GenesisConfig::<Test> {
+		balances: vec![
+			(A, 100),
+			(B, 200),
+		],
+	};
+	genesis.assimilate_storage(&mut t).unwrap();
+	t.into()
+}
+
+#[test]
+fn two_party_successful_swap() {
+	let mut chain1 = new_test_ext();
+	let mut chain2 = new_test_ext();
+
+	// A generates a random proof. Keep it secret.
+	let proof: [u8; 2] = [4, 2];
+	// The hashed proof is the blake2_256 hash of the proof. This is public.
+	let hashed_proof = blake2_256(&proof);
+
+	// A creates the swap on chain1.
+	chain1.execute_with(|| {
+		AtomicSwap::create_swap(
+			Origin::signed(A),
+			B,
+			hashed_proof.clone(),
+			50,
+			1000,
+		).unwrap();
+
+		assert_eq!(Balances::free_balance(A), 100 - 50);
+		assert_eq!(Balances::free_balance(B), 200);
+	});
+
+	// B creates the swap on chain2.
+	chain2.execute_with(|| {
+		AtomicSwap::create_swap(
+			Origin::signed(B),
+			A,
+			hashed_proof.clone(),
+			75,
+			1000,
+		).unwrap();
+
+		assert_eq!(Balances::free_balance(A), 100);
+		assert_eq!(Balances::free_balance(B), 200 - 75);
+	});
+
+	// A reveals the proof and claims the swap on chain2.
+	chain2.execute_with(|| {
+		AtomicSwap::claim_swap(
+			Origin::signed(A),
+			proof.to_vec(),
+		).unwrap();
+
+		assert_eq!(Balances::free_balance(A), 100 + 75);
+		assert_eq!(Balances::free_balance(B), 200 - 75);
+	});
+
+	// B use the revealed proof to claim the swap on chain1.
+	chain1.execute_with(|| {
+		AtomicSwap::claim_swap(
+			Origin::signed(B),
+			proof.to_vec(),
+		).unwrap();
+
+		assert_eq!(Balances::free_balance(A), 100 - 50);
+		assert_eq!(Balances::free_balance(B), 200 + 50);
+	});
+}