In previous blog articles, weโve covered a broad view of cryptocurrency, decentralized finance (DeFi) and how to choose between centralized and decentralized exchanges (CEX v DEX).
๐ In this article, weโll take a closer look at crypto or token swaps, define what they are, how they work, their advantages and disadvantages, as well as a brief look at the analysis platform DEXTools. Here is our brief guide to get you on a clearer path to understanding.
โ WHAT IS A DECENTRALIZED EXCHANGE (DEX)๐ง?
๐ A decentralized exchange (DEX) is a type of cryptocurrency exchange that operates on decentralized principles, leveraging blockchain technology. Unlike traditional centralized exchanges, DEXs eliminate the need for intermediaries and central authorities, allowing users to trade directly with each other. Essentially, these apps and sites are token swapping platforms.
Examples of decentralized exchanges include: 0x Protocol, PancakeSwap, UniSwap, SushiSwap, Curve & Venus.
โ WHAT IS A TOKEN SWAP?
๐ซ A token swap, or crypto swap, ย involves the exchange of token types between two parties, from one blockchain to another. They can be done on DEXs and token swapping platforms.
A direct token swap or trade is suitable for many investors. It involves trading two or more tokens through a swapping service.
๐คทโโ๏ธ WHY TOKEN SWAPS?
Similar to trading stocks and bonds, investors can swap tokens for potential profit๐ฐ. Swapping allows them to adapt to changing market conditions๐ and take advantage of attractive terms and benefits๐.
๐คToken swap platforms have simplified the exchange process, providing investors with more opportunities and benefits. Swapping tokens can save on fees and enable instantaneous transactions, making it advantageous for day-traders and those seeking efficiency.
TOKEN SWAP ADVANTAGES & DISADVANTAGES
โ๏ธ Provides cost-effective, effortless, and secure transactions
โ๏ธ Ability to trade on both custodial and non-custodial exchanges
โ๏ธ Enhanced data integrity via blockchain recording
โ๏ธ Highly cost-effective due to the smart contract feature
โ๏ธ Potential for accessing attractive terms and benefits based on goals
โ Limited to crypto-to-crypto trading, not fiat-to-crypto
โ Market liquidity challenges in some cases
โ Potential risks associated with using unfamiliar or less secure platforms
โ Dependency on blockchain network congestion and gas fees
โ No governing authority to oversee swap transaction
โ Complex for users unfamiliar with the token swapping process
๐ฆ METAMASK TOKEN SWAP WALKTHROUGH
Trading cryptos directly can easily be done on crypto wallets such as MetaMask. The process is fairly simple and straightforward.
Step 1 โ On the main MetaMask interface, click on the button marked โSwapโ.
Step 2 โ The main Swap screen will pop up. Choose the token that you have, that you're willing to โspendโ, using the โSwap fromโ drop-down menu at the top.
Step 3 โ Further down, choose the token you're interested in acquiring using the second โSwap toโ drop-down menu.
Adjust the amount of the first token up or down until you're comfortable with the amount you're spending, and the amount you're acquiring.
Toggling the Advanced options allows you to adjust the slippage tolerance and smart transaction feature.
Step 4 โ At the bottom of the screen, click the "Get quotes" button.
MetaMask swaps will search for the best price. Once the DeFi number-crunching is done, you get the quote screen.
Metamask will give you the most up-to-date price and availability for your swap.
Step 5 โ Once you are ready to proceed and execute your swap, smash the Swap swiper across your screen.
You should see your new tokens in your MetaMask wallet soon after.
๐ง DEXTOOLS
DEXTools is a decentralized exchange data and analysis tools platform for traders. It offers comprehensive information on token pairs across various blockchains and DeFi protocols.
Traders can stay informed about new token pairs, track known pair/token activity, and access insights such as top gainers or losers. Community managers can also monitor DeFi protocols and relevant tokens through the 'recently updated' tabs. The site covers many different small altcoins in its listings.
๐ EARNING CRYPTO WITH BLOOM
๐ฒ. The Bloom shopper rewards app allows you to earn cryptocurrency (like Bitcoin, Ethereum and a range of other altcoins) with every purchase made on your Visa card ๐ณ.
๐ฆ All you need to do is download the Bloom app, register an account, link your Visa card and shop anywhere using your credit or debit card.
๐ฐ With every purchase, you will earn Bloom Coins by simply using your Visa card๐ณ. The more you use your card, the more Bloom Coins you will earn.
๐ Bloom Coins can be redeemed for in-app rewards and converted into crypto.
๐ Converting crypto on Bloom is free of charge and has no gas fees!
๐ Earn exclusive 3x Bloom Coin rewards with a Premium Membership.
The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such. Bloom does not recommend that any cryptocurrency or NFTs should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.