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What Are Crypto Swaps and How To Do Them the Right Way
January 17, 2024

What Are Crypto Swaps and How To Do Them the Right Way

As cryptocurrency as an alternative currency and payment method gains more influence in world finance, so does a need for a crypto exchange or swap. In this article, we will find out what crypto swaps are and how to do them correctly. Coin migration is inevitable in the cryptocurrency world, and learning how to use simple swap operations is something we must learn to deal with.

Definition of Crypto Swaps

Crypto swaps, or cryptocurrency swaps, refer to exchanging one cryptocurrency for another. To swap crypto is just like exchanging fiat currency, for example, exchanging US dollars for Japanese yen. Crypto swap services usually take place through decentralized exchanges (DEX). However, even some centralized exchanges, too, feature crypto swap options.

The main purpose of a crypto swap space is to trade between different cryptocurrencies without any intermediary or a traditional order book. This means the transactions happen when you simply exchange your cryptocurrency for another. Please also check possible DeFi swap geo-restrictions: they can be applied in some cases depending on a crypto swap platform.

So why do crypto swaps happen? They work just like in the fiat currency world. For example, your Bitcoin goes down for some time, but Ethereum skyrockets; this clearly indicates a potential need in a crypto swap transaction. Let’s now study what steps must be taken to undertake crypto swaps successfully.

Choosing a Reliable Swap Platform

First, you must find a reliable and secure online platform that supports crypto swaps. Second, you must ensure that the cryptocurrency exchange has a good track record in terms of security, liquidity, and user experience. Popular decentralized exchanges include a universal platform Ledger ecosystem, plus Uniswap, PancakeSwap, 1Inch, dYdX, Orca, Jupiter, Curve, and SushiSwap, among others.

Basically, all these services on our DeFI swap list are known as secure and reliable platforms. However, each has its specifics. All in all, finding the best crypto swap exchange is entirely up to you. For example, after the Shibaswap release date on July 21, 2021, this online platform has come through various changes, so you always have to follow the news and be updated on it.

True, all these platforms charge crypto swap fees for your transactions. For example, your Ledger swap fee might be as high as 0.3% in some cases. However, experts recommend paying these ledger exchange fees for a number of reasons. For instance, such fees support the speed of your transactions. So, at the end of the day, your swap crypto price is 100% rewarded.

Another option is to swap crypto on Binance. The platform’s commission for buy/sell operations is usually 0.5%, so, overall, it looks pretty attractive to conduct a crypto swap there. You must set up your Binance account first, then verify with two-way identification for added security. After that, you can execute your crypto swap operations using the Binance convert service.

On the other hand, you may also go for a centralized exchange (CEX), like Coinbase. They offer their benefits; for example, centralized exchanges are considered a better solution for new investors who may not understand the specifics of DeFi.For example, centralized exchanges may offer an easier user interface and support more advanced chat. They can also be linked directly to your bank account.

As you see, the crypto swap vs exchange (CEX) battle is merely a question of your preferences and purposes.

How Crypto Swaps Work

Various platforms may have slightly different processes and solutions for performing swaps. For example, according to CoinLedger.com, a respected online crypto analytical resource, Uniswap is the best universal choice, while Curve is best for stablecoins, and PaincakeSwap is great for Binance Smart Chain. Also, in decentralized exchanges, swaps often occur through liquidity pools, and you need to provide liquidity or trade against existing pools.

You will also need a functional and smooth-running crypto swap app on your smartphone or computer to conduct exchange operations. Basically, crypto swap transactions are no different from typical fiat currency exchanges. You choose the app or online resource, choose our pair of cryptocurrencies, and execute the transaction. You can visit Cointelegraph online to check out step-by-step crypto swap operations: they have a nice video there explaining the basics and nuances.

Now, it is time to think about choosing a crypto wallet.

Setting Up Your Crypto Wallet

First, you must set up a compatible cryptocurrency wallet for any online crypto swap service. For decentralized exchanges, you’ll need a crypto wallet that supports the exchange’s blockchain. MetaMask is usually the #1 choice for a crypto wallet. It works fine with Bitcoin, Ethereum and most other cryptocurrencies.

Of course, just like with an online crypto swap service, choosing a wallet is up to you. Other wallets like TrustWallet, Trezor, Coinbase Wallet, Ledger, Exodus, and BlueWallet are also a fine choice.

After connecting your wallet to an online swap crypto service of your choice, you are cleared to perform exchange operations. Here are some tips to do it safely.

1. Verify Your Token Address

It is also essential to double-check the token addresses before executing any swap exchange. In the crypto world, incorrect addresses can lead to the loss of your money, as simple as it gets. So please ensure you send and receive the cryptocurrencies properly while performing your swap transactions.

2. Beware of Slippage in Crypto

Slippage in the cryptoworld is the difference between the expected price of a trade and the price at which the trade is executed. In volatile markets, slippage may occur. Some online platforms allow customers to set slippage tolerance to control the maximum deviation from the expected price.

3. Keeping Your Private Keys Secure

This is crypto basics, but if you’re using a wallet, ensure that you keep your private keys secure. Your private keys grant access to your money. Losing your access may lead to a loss of control over your assets. Such things have been happening with other people’s assets, so please be on alert and keep your keys in a safe place, accessible only for you.

Once Again: Checking Out Transaction Costs

Please be aware of the transaction costs associated with crypto swaps. Blockchain swap fees are something that can possibly lower your profits while crypto swapping.

Crypto swaps on blockchain networks involve transaction fees, commonly known as gas fees. You will have to understand how these costs work to be ready for any fluctuations based on network congestion.

Each crypto swap platform sets up its own transaction fees. However, you usually pay somewhere between 0.25% to 0.3% in swap fees on a DEX platform. Various strategies to lower your transaction costs include selecting the optimal cryptocurrency pair, choosing the right timing for swaps, and batching transactions.

For example, a common strategy would be to bundle multiple operations into a single transaction. As each operation within a transaction incurs a cost, executing one operation instead of several can reduce the overall fees.

Stay Tuned

Finally, it is highly recommended to be in touch with the crypto market, trends, news, and any changes to the platforms you’re using. We all know that market conditions and exchange features constantly evolve, so staying updated is crucial to keep your crypto swap transactions safe and profitable.

By following these guidelines, you can conduct crypto swaps more safely and effectively. Always stay informed and cautious, perform your research, and consider the features of the online crypto swap platform you use for your transactions.

FAQ

Can I perform crypto swaps on a mobile device?

Yes, many decentralized platforms offer mobile apps or have mobile-friendly interfaces, allowing users to perform crypto swaps on their smartphones. Ensure you use secure and trusted apps.

Are there fees associated with crypto swaps?

Yes, crypto swaps may involve fees, including transaction fees and liquidity provider fees. Check the fee structure of the platform you use before initiating a swap.

Can I reverse a crypto swap if I make a mistake?

No, crypto swaps on decentralized platforms are typically irreversible. Always verify the details before confirming a swap to avoid potential losses.

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