Token swaps are a common way to exchange tokens on the blockchain. They can be used to convert tokens from one blockchain to another.
Additionally, exchange tokens for different versions of the same token, or swap tokens for other assets, such as fiat currency or NFTs.
In the recent few years, there have been numerous changes and improvements in the crypto field.
Since the launch of Ethereum in 2015, decentralized finance (DeFi) has come a long way. And out of all the services that have played a crucial role in building the DeFi ecosystem, token swaps reign supreme.
Without the ability to swap tokens within a blockchain network or between two different blockchains, DeFi as we know it would come to a grinding halt.
One of the most prominent features that have entered the crypto space is Token Swap. The main motive behind this feature is to provide you with crypto-to-crypto trading.
In this guide, we will discuss everything you need to know about token swaps, including
- What are token swaps?
- How do token swaps work?
- What are the benefits and risks of using token swaps?
- How to conduct a safe and successful token swap.
Table of contents
- What are Token Swaps?
- Which Tokens Can be Swapped?
- What is the Use of Token Swap?
- Top Crypto Swap Platforms 2023.
What are Token Swaps?
Chiefly, Token swaps are a decentralized process that allows you to exchange one type of token for another.
Additionally, this can be done between two parties, or on a decentralized exchange (DEX). When you swap tokens, you are essentially transferring the ownership of your tokens from one address to another.
Further, the process is similar to sending cryptocurrency to another wallet but with the added complexity of exchanging one type of token for another.
These swaps can basically be used for two different functions in the crypto world.
First, one is allowing you to exchange crypto without using fiat currency.
This means now you can exchange one crypto with another whatever crypto you desire.
Conversely, swapping can be done with well-known cryptos, but it might be tough to trade the cryptos that are less popular.
Due to this reason, many experts do not recommend you swap less popular tokens as the limited availability will hinder you from making a profit.
Mainly, because to swap any less popular token you will have to engage in the two steps of trading.
Firstly, you will have to convert your crypto to fiat or another famous crypto like Bitcoin or Ethereum and then buy your desired coin.
The main drawback of this process is that you have to pay double fees, which is not suitable for most people.
What Measures have been taken in the Crypto market?
There are many exchanges in the market that solve the problem of two-step verification.
These exchanges have taken the initiative to source their liquidity to you. So, now you can directly swap your crypto without double fees or other hindrances.
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How does it work?
These token swaps work by using a smart contract. A smart contract is a piece of code that automates the exchange of tokens.
When you swap tokens, the smart contract will execute the exchange and transfer the ownership of your tokens to the other party.
Does it sound overwhelming?
In simple words, a token swap is the transfer of digital tokens from one blockchain to another.
It frequently occurs when a project raises funds on one blockchain and then migrates its tokens to a separate proprietory after the mainnet is released.
For a variety of reasons, blockchain projects may choose to use other blockchain networks.
The project’s native token must be exchangeable for another token that is compatible with the new network. Which must be provided by the development team.
That said, numerous services exist on the market that allow you to buy and sell cryptocurrencies in return for traditional currencies.
Or other cryptocurrencies. Due to the restricted liquidity and the number of trading pairs accessible on each exchange, you may find it impossible if you want to trade directly between two crypto tokens.
And then, this is particularly true for lesser-known tokens, which are usually offered on only a few exchanges.
Instead of using fiat money, you must use one of the most prominent cryptocurrencies, such n Bitcoin or Ethereum, as an intermediary.
What are the Benefits?
- They are a quick and easy way to exchange tokens.
- Additionally, they can be done without the need for a centralized intermediary.
- Also, they can be used to swap tokens between different blockchains.
What are the Risks involved?
- The exchange rate may not be favorable.
- There is a risk of fraud or technical problems.
- You may need to pay gas fees.
How to conduct a safe and successful Token Swap?
- You should do your research and choose a reputable DEX.
- Make sure you understand the exchange rate and fees before you swap tokens.
- Do use a secure wallet to store your tokens.
- Be careful of phishing scams.
Most exchanges in the world of crypto offer swapping services, but only a few of them are trustworthy.
That’s why it’s highly recommended to do good research before you choose an exchange service.
And make sure to proceed with transactions very carefully and double-check the amount you have put into the swapping.
It will help you avoid unwanted problems.
One of the most popular swap exchange services is known as kaleido.io. This platform allows you to swap your tokens in a highly secure and easy to use along with other useful functions like hashed locks, atomic swaps, and a flexible process of cross-token swapping.
Which Tokens Can be Swapped?
There are many different types of tokens that can be swapped, but some of the most common I am listing here.
ERC-20 Tokens –
These are tokens that are built on the Ethereum blockchain. They are the most popular type of token, and many of the most well-known cryptocurrencies, such as Ethereum, Bitcoin, and Tether are ERC-20 tokens.
BEP-20 Tokens –
Chiefly, these are tokens that are built on the Binance Smart Chain blockchain. They are similar to ERC-20 tokens, but they are designed to be more efficient and scalable.
TRC-20 Tokens –
Tokens like this are built on the Tron blockchain. They are similar to ERC-20 tokens, but they are designed to be more energy-efficient.
SPL Tokens –
Built on the Solana blockchain, they are similar to ERC 20 tokens, but they are designed to be faster and more secure.
Non-fungible tokens that represent unique assets, such as digital artworks or collectibles.
These NFTs can be swapped for other NFTs. or they can be swapped for fiat currency or other assets.
Further, the specific tokens that are swapped will vary depending on your requirements.
For example, if you want to swap tokens between different blockchains, you will need to use tokens that are compatible with both blockchains.
If you want to swap tokens for fiat currency or other assets, you will need to use tokens that are listed on a centralized exchange.
So, it is important for you to do your research, as there are a number of risks involved (above mentioned).
Read More Cross-Chain Interoperability Is It?
Which Crypto is Most Profitable to Trade?
Empirically, Bitcoin has been one of the highest-performing assets and a top choice for investors trading cryptocurrency for profit. BTC has been one of the highest-profit cryptos, from a few cents to its record high to date.
How Crypto Swap Works?
First, let’s understand what a is Swap.
Swap facilitates the instant exchange of two non-native tokens between two unique blockchain protocols without the need to commence the traditional crypto-to-fiat exchange or token migration.
It allows you to swap tokens directly from the official private key wallet or the trading account.
Is Swap Better than an Exchange?
Usually, the platforms providing the crypto swaps are decentralized. That said, crypto exchanges are centralized.
Cryptocurrency swap platforms impose a lower transaction fee than crypto exchanges as there is no third-party involvement in the case of the former.
Read More Riot Blockchain-What Is It?
What is the Difference between Token Swap and Atomic Swap?
A token swap is synonymous with token migration. Likewise, the terms “coin swap” and “coin migration” mean the same.
However, an atomic swap is entirely different and involves exchanging cryptocurrencies on a separate blockchain with a smart contract.
This process eliminates the need for centralized intermediaries.
The term atomic swap is coined because atoms are conceptually indivisible. Moreover, an atomic trade is essentially an all-or-nothing affair.
The term ‘Atomic swap’ has an entirely different definition from token swap and migration.
Atomic swap allows you to exchange tokens on different blockchain networks.
Smart contracts are also involved in this process. To process the transaction, the seller and buyer must agree on a contract mentioning the terms and conditions of the transaction.
If both follow the conditions correctly, the transaction will be successful. Otherwise, the transaction will be neglected entirely.
An atomic swap is complete when a buyer and seller do the transaction exactly like they have agreed to do, and if not, the transaction does not happen at all.
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What is the Use of Token Swap?
The main motive of token swapping is to convert a particular token into another crypto token. This has emerged as a straightforward way for you if you want to transfer an existing token to another and receive the benefits.
Many exchange platforms have understood the demand for swapping, and they have introduced the feature of crypto-to-crypto trade to serve you a better experience.
But if we see token swapping from the developer’s eyes, then the primary motivation is slightly different. To establish a blockchain network, a decent amount of investment is required to offer tokens for investors to buy.
To attain this objective, developers build a second-layer token on an already existing blockchain network.
This is extremely helpful for the developers as it enables them to operate their tokens on a blockchain network while building their own blockchain network.
What is Token Migration?
As for token migration, it does not mean buying one token for another, but the complete replacement of a token by a new token that does not exist until the swap occurs.
Another definition of the token swap indicates the migration of a particular blockchain project to another blockchain.
This function is usually operated by the developers who use a blockchain network to collect funds from the investors and then migrate the tokens to another blockchain network.
In general, if people are talking about atomic swaps, they are focusing on buying and not selling.
The main motive behind the migration of one blockchain to another probably is to avail some unique and beneficial features of a token.
However, it should be the developer’s duty to help you with the facility to swap the current native token NEO are some of the tokens to the new blockchain of the network without any significant inconvenience.
ETH and NEO are some of the cryptocurrencies that allow you to build your token on their network.
Read More The Next Crypto Bull Run?
Top Crypto Swap Platforms 2023.
This is a real-time cryptocurrency exchange that offers the best exchange rates for Bitcoin, Ethereum, and 400+ other digital assets.
Basically, it supports more than 140 cryptocurrencies and allows you to exchange at both floating and fixed rates.
The swap is instantaneous as there is no deposit storage and each account is safeguarded by two-factor authentication on Changelly.
Additionally, it provides a full-featured trading platform, DeFi Swap, and a fiat-to-crypto market.
Except for the US and nations where cryptocurrency transactions are expressly forbidden by law, it is accessible everywhere else.
a. The platform charges low fees for crypto-to-crypto transactions.
b. It is easy to use and enables anonymous transactions.
c. The platform is integrated with different wallets.
a.It charges high fees for crypto-to-fiat transactions.
b. It has limited payment options.
c. The platform has high minimum trade amounts
d. It is not regulated in the US.
It is a real-time crypto exchange that allows for unlimited swaps. Registration is not required for this service.
Basically, it enables you to convert over 450 crypto assets limitlessly, without the need to register, and with no additional or hidden fees.
You can also use fiat currency to purchase a wide variety of cryptocurrencies. Once you place your order, the algorithm will find the best offer on the market and execute a swap for you.
Additionally, StealthEX has partnered with a number of extremely quick and simple exchanges such as Binance.
This exchange does not provide services like providing wallet etc.
a. StealEX is suitable for businesses, beginners, and experienced traders.
b. The platform has an easy-to-use user interface.
c. It offers 24/7 customer support through various methods.
The platform does not provide loyalty bonuses or discounts.
b. There are no additional features for advanced traders.
c. You can only make card payments for transactions.
It is a cryptocurrency exchange aggregator that allows you to swap over 2050 coins at fixed and floating rates with no limitations, registration, or additional fees.
A very quick and easy to use find cryptocurrency exchange. It connects over 12 exchanges and allows you to trade over 420 cryptos.
To execute a swap, you do not need to open an account or enter personal information on this platform.
a. The platform supports more than 2000 cryptos.
b. With SwapSpace, you can access the industry-best trading prices on more than 12 different exchanges.
c. The platform offers 24/7 customer support.
d. No account or registration is needed to access SwapSpace.
a. You can only exchange cryptocurrencies on this platform.
b. A digital wallet is a must for you to access SwapSpace services.
It is a cryptocurrency exchange that offers anonymous, safe, and quick cryptocurrency swaps.
You can choose from over 200 currencies, and Godex does not demand any personal information, accounts, or registration.
There are no exchange limitations. You receive a 0.45% commission from the exchange on all trades made by new users.
However, if the new user trades 50 BTC using your referral link, the referral commission will rise to 0.05%.
The commission, however, might rise by as much as 0.60%. Without a doubt, Godex.io affliate program is very generous.
You will be required to pay the trading fees on Godex.io each time you place an order.
The trading fee is primarily a percentage that must be paid in accordance with the trade order. There are no fees to pay when you withdraw crypto from your Godex.io account.
a. Godex is a privacy-focused crypto-swapping site.
b. You can trade cryptocurrencies without creating an account.
c. The platform avoids volatility when executing a transaction.
d. It offers easy crypto swapping by partnering with Edge crypto wallet.
a. It does not offer trading options like limit orders.
b. It also does not support fiat currencies.
Chiefly, it is a website platform designed for straightforward exchanges of more than 700 cryptos and over 60,000 trading pairs, with no registration required.
A non-custodial service for simple and fast cryptocurrency processing and exchanges.
Additionally, it strives for maximum safety, simplicity, and convenience.
ChangeNOW does not store your funds or require account creation. Further, it provides a huge variety of tools for business, including API integration., exchange widgets, custody storage, while-label solutions, to put it simply.
a. ChangeNOW allows instant exchanges and does not hold any upper limits for transactions.
b. You can make Visa or MasterCard Payments on it.
c. It simplifies user experience by partnering with other third-party platforms.
a. It has a quick registration process and fast transactions.
b. No upper amount limits for swapping.
c. It provides access to non-custodial services.
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Chiefly, token swaps are a convenient and secure way to exchange tokens. However, it is important to be aware of the risks involved before using them.
If you are considering using a token swap, be sure to do your research and understand the risks involved.
The exchange platforms have destroyed the investor’s load of processing swap tokens.
Many platforms have added the swapping feature with the main focus of solving problems like double fees, security, two-step process, etc.
Do keep in mind that there are many exchanges available in the market, and only a few of them can be a good fit for you.
It is an agreement between two parties that exchange different token types. In a token swap, one party will pay a certain amount of token to the other party and receive the agreed amount of token in return.
To swap tokens, you must select a cryptocurrency pair, enter the amount and just hit the “SWAP” token button.
The Token Swap has specifically been designed to support ERC-2-0 and BEP-20 tokens. These are fungible tokens on Ethereum, Polygon as well as, and Binance Smart Chain. You can technically swap any token by following the ERC-20 standard on each of these blockchains.
Yes, but it will involve taxation as well as an exchange fee that a third-party broker may take a day or two to transfer the money to your bank account.
If Selling is taking place on a crypto exchange, you will be hit with whatever commission or other fees they charge on both sides of the transaction. Swapping, on the other hand, allows you to seamlessly transfer one crypto for an equal amount in value to another.