> For the complete documentation index, see [llms.txt](https://hinkal-team.gitbook.io/hinkal/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hinkal-team.gitbook.io/hinkal/hinkal-pay/how-it-works.md).

# How It Works

### **On-chain behavior**

**The sender:**

* Deposits funds into the Hinkal smart contract instead of transferring directly to the recipient's public wallet
* Associates the deposit with the recipient's public address

The recipient does not receive an on-chain transfer to their EOA wallet. Instead, funds appear as a private balance within the Hinkal contract, cryptographically linked to their public wallet.

**Subsequent payouts can:**

* Remain within the private environment
* Or exit to a public address via a standard on-chain transfer

***

### **Swaps**

A swap is routed through a temporary address created for that transaction, which executes the trade and returns the output.

On-chain, observers see a deposit into Hinkal and a trade executed by an address that is not linked to the wallet that initiated it.

The output then follows the same two paths as any payout: it stays in the private balance, or it exits to a public address.

***

### **Privacy properties**

Hinkal Pay ensures:

* The recipient wallet does not appear as the on-chain receiver
* Wallet balances remain private
* Incoming settlement volumes cannot be easily tracked or clustered
* Outbound payout relationships are not publicly exposed

Externally, observers see deposits into the Hinkal smart contract **without** attribution to specific operational wallets.