There are a plethora of exchanges on the crypto market that enables crypto traders to sell and buy cryptocurrencies in exchange for fiat currencies or other cryptocurrencies. But there seems to be difficulty with users wanting to trade between two crypto tokens.
What Are Token Swaps?
A token swap is described as the transfer of tokens from one blockchain network to the other. For many reasons, other blockchain networks might be chosen by blockchain projects. So the project’s native token has to be exchangeable to ensure compatibility with the new network that is being provided by the developers.
Where Are Token Swaps Supported?
Token swaps are in most cases enabled by the cryptocurrency exchange. Often, token holders are required to have their token registration through the creator of a blockchain project. Meanwhile, token holders are enjoined to store their assets on a crypto exchange. This comes with a halt for different trading choices on the exchanges.
Benefits Of Token Swaps
Token swaps offer a seamless way of trading cryptocurrency. With different platforms providing swapping features that are considered simple, vast, and secure, these exchange systems enable users to transfer data between custodial and non-custodial platforms.
Users can also benefit from its data integrity because every transaction and token swap is kept on the blockchain.
Token swap smart contract is very useful in the elimination of third-party token fees, enabling payment through tight escrow. Token swap help crypto investors to save more money even while trading.
Things To Know Before Crypto Swapping
1. Remember Ethereum Gas Fees
Ethereum enables many projects to use its smart contracts in the development of ERC20 tokens. The payment if a gas fee is required as the coins are processed via Ethereum. Depending on the trading volumes in the market, gas fees might be high, which in turn reduces the profits made on every trade.
2. Understand Exchange Fees
Exchange fees must always be put into consideration by consumers, which sometimes vary. You can surf through crypto swapping sites’ FAQs to understand more before completing your translation.
It is also important to confirm the expected amount for the cryptocurrency you want to receive from every swap. In some instances, sites can display the dollar equivalent of your chosen token, to ease anxiety.
3. Use The Appropriate Wallet
Ensure your newly switched cryptocurrency is duly supported before it is transferred to your wallet. Tokens of ERC20 origin but that have migrated to their native protocols might pose some difficulty in being migrated. To ensure transactions are painstakingly confirmed before being completed.
4. Follow Tested And Trusted Procedures
Always do well to use two-factor authentication in accessing your crypto wallets. Keep your private keys private, and do not use them directly on any website. Trade with credible exchanges and stay woke to their centralization.
When a cryptocurrency is stored in a centralized exchange, you don’t have absolute control over it. Therefore, you might not be able to access your cryptocurrency in the event of some anomalies with your wallet until the issue is resolved.
Token swap can improve its user experience to allow fast and direct crypto trades that are cost-effective. However, do a background check before resorting to a token exchange. Factors like time constraints and expenses due to slippage must be input into cognizance before you can have an accurate prediction for the true value of token swaps.