As altcoin trading is gaining popularity, how can crypto swap benefit crypto investors? How can traders save both time and money by swapping crypto efficiently? We will also look into different ways to swap crypto and its advantages.
What is Crypto Swap?
Crypto Swap enable the traders to swap one cryptocurrency for another, between two wallets, without the use of fiat cash as an intermediary. Unlike traditional coin trading, swapping crypto tokens is seamless and quick.
If you’re looking to change from coin A to coin B, you don’t have to first exit to USD to buy coin B using the USD. For instance, you will probably find that there aren’t many exchanges that provide the COMP/AMP trading pair if you wish to convert your COMP token to AMP. As a result, you might need to exchange your COMP tokens for fiat money or other well-known cryptocurrencies like BTC, ETH, or USDT first. From there, you may instantly trade fiat currency or well-known cryptocurrencies for AMP.
You will concur that the above traditional procedure is inefficient in terms of both cost and time. You would have to pay transaction fees at least several times in order to carry out such a trade. Furthermore, it is hard to predict how price volatility will affect the trade’s profitability. Keep in mind that the value of crypto assets is frequently volatile. Therefore, using the aforementioned strategy could make it challenging to enter your target pricing range. In the following section, we will see how crypto swap is more effective.
How does Crypto Swap Work?
Exchanges and other platforms started introducing the crypto swap functionality as a result of the limitations of the traditional approach of converting native cryptocurrencies to fiat and then buying the desired crypto. Users can immediately trade one cryptocurrency asset for another using this. The whole process is to convert one crypto coin into another coin without the need for fiat currencies. To facilitate instant coin-to-coin transfers, crypto swap sites typically utilizes proprietary smart-order-routing engine and/or smart contracts.
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Smart-Order-Routing Engine:
These are proprietary engines of exchanges that compare prices across different exchanges to discover the best deals for each swap you want to make. It might provide you with better prices than many of the individual exchanges themselves, depending on the currency pair you are dealing with. These engines might also split the swap across many exchanges if doing so offer traders a better value.
Smart Contracts:
These leverage a Hashed Time Lock Contract (HTLC), a virtual two-way safe, to automate the exchange of tokens. The contract deploys a complex mathematical-based encryption technique known as a hash function. Additionally, the contract is also time-bound, meaning that transactions are annulled when one or both parties fail to keep their end of the contract within the allotted time period.
CENTRALIZED VS. DECENTRALIZED CRYPTO SWAP PLATFORMS
The cross-chain swap can be categorized into the following:
CUSTODIAL CENTRALIZED EXCHANGE:
Going via a centralized exchange (CEX) for crypto swap entails the creation of an account and providing your personal information for registration (KYC) before you can begin. Once your account is approved after the KYC completion, you may start trading crypto by sending your coins to their platform. Your newly acquired cryptocurrency will be received on the exchange’s site itself once you’ve completed your swap. So the major drawback is that you lose control of your crypto when you transmit your cryptocurrency to an exchange and trade there. Instead, you’re leaving the exchange in charge of your crypto assets. If you don’t take your crypto off of their platform, it remains in their control. This implies that they may impose restrictions on what you may do with your cryptocurrency. Also, the withdrawal of your crypto from the CEX incurs fees as well.
NON – CUSTODIAL DECENTRALIZED EXCHANGE:
Decentralized exchanges (DEX) on the other hand, are becoming increasingly popular and more prominent than centralized exchanges as users don’t need to create an account to use them. You could just connect your favorite DeFi wallet and start swapping and trading your crypto. Also, they are non-custodial! This means that the exchange you are using is not going to keep your crypto on their platform. How it works is pretty simple: you send them one cryptocurrency and they’ll send you another of your choice back to the address you’ve given them. This means you won’t need to leave your crypto in their hands. The moment your crypto swap is completed, you immediately are in total control of your newly received crypto. And of course, no withdrawal fees!
In the next section, we’ll see how users can leverage this to do crypto swap most efficiently.
BENEFITS OF CRYPTO SWAP
Decentralized crypto swap exchanges offer multiple benefits for the traders, such as non-custodial trading, faster transactions, on-chain exchange, and zero withdrawal fees. In most cases, crypto swap provides an easier gateway to cryptocurrencies with low market capitalization. Additional reasons to switch to crypto swaps :
- Quickly shift to any Stablecoin from a volatile asset.
- Convenient, secure and instant swap to the growing asset.
- Hedge against risks.
HOW CAN USERS SWAP SMARTLY?
The major con with DEXs and DEX aggregators is the lack of cross-chain crypto swaps. Due to this, the users have to hop from exchange to exchange. Or do a series of transactions on the same exchange, to complete one cross-chain transaction. This also leads to the second disadvantage, making the platform difficult for beginners in crypto space. It also burdens advanced crypto traders, who want to extensively move their crypto across different blockchains, incurring higher transaction fees. It’s here, we introduce a smarter and more effective way to swap crypto – Hybrid Exchanges.
ADVANTAGES OF HYBRID EXCHANGES:
Hybrid Exchanges aggregates both CEXs and DEXs combining leading networks and goodness of both centralized and decentralized exchanges, into a powerful cross-chain platform. They are decentralized and much more effective in terms of cost, time, and convenience.
RocketX is a hybrid crypto exchange, sourcing its liquidity from 250+ exchanges, both centralized and decentralized. And have 15,000+ crypto tokens listed on their platform. It works like the Expedia of both centralized and decentralized exchanges. They list the asset exchange rates, instead of hotel prices, from several DEX aggregators including 1Inch and ParaSwap, along with a growing pool of CEXs. This provides much better liquidity than the DEX-only aggregators. This further optimizes swaps for users through advantageous prices, lower slippage, and limited gas fees. As mentioned earlier, this is possible because they make use of vast liquidity across CEXs & DEXs.
PRICE COMPARISON DASHBOARD:
Users can enjoy hassle-free cryptocurrency swaps and the best rates by comparing the most trusted crypto exchanges. It also doubles up as a dashboard. Crypto traders can use it to compare the rates and gas fees being offered across multiple exchanges. Both beginners and active traders will find that this can save them quite a lot of time, which is wasted in looking across the order books of multiple exchanges. RocketX is free to use when orders are routed via DEXs. They only charge industry minimum platform-fees, when orders are routed via CEX in case of better rates.
CROSS-CHAIN CRYPTO SWAP:
Another significant advantage of RocketX as a hybrid crypto swap exchange over DEX-only aggregators is that they offer 1-click cross-chain crypto swapping and bridging. Not only does this make the platform much easier to use for multichain transactions, but it also saves tons of transaction fees and time by eliminating the need to hop from exchange to exchange, for moving crypto from one blockchain to another. Currently, they support 9 leading chains – Fantom, Solana, Avalanche, Ethereum, BNB Smart Chain, Polygon Matic, Optimism, Arbitrum and Gnonsis, making them interoperable with cross-chain transactions. Very soon, they plan to support 40+ blockchains on their platform.
With a totally non-custodial solution that supports a variety of popular digital wallets like Coinbase, TrustWallet, MetaMask, Phantom etc, this crypto swap platform gives users total control over their digital assets. RocketX has cleared security audit from Zokyo and NII Consulting, one of the leading cyber security firms in APAC. RocketX also has a very user-friendly interface similar to the Web2 dApps we are accustomed to. This makes using the platform and exchanging tokens even more straightforward, greatly improving users’ DeFi experiences.
MOST POPULAR ON-CHAIN CryptO SWAPS
Explore more ON-Chain Swaps...
Hybrid 1-step crypto exchanges are the easiest way to traverse the cryptoverse seamlessly across different networks and gain access to their varied benefits.
Video Tutorials on ON-CHAIN CRYPTO SWAPS
Here are a select few popular video tutorials on how to economically and easily do smart on-chain crypto swaps via the Hybrid and decentralized platform – RocketX Exchange.
