With thousands of cryptocurrencies floating around and many being added each day, and some promising opportunities behind owning some of your own, it won't be long before you consider swapping some crypto.
Simply put, swapping crypto is the action of exchanging a coin or token you hold for a coin or token you desire. Both crypto assets' present market value determines how much you get when you swap. After deducting fees, of course, more on that below.
While you will be familiar with $ETH and $BTC, there would be many reasons why you will want to hold varying quantities of other tokens. Owning a token is not only an opportunity to grow our portfolios as crypto enthusiasts but also an investment in a future decentralized business. Apart from this, owning certain tokens also allows you to participate in Decentralized Autonomous Organizations (DAO) as part of its community to exercise your vote in various decisions. Tokens = ownership, and that is the very heart of the Web3 future.
Let's now understand how trading crypto is very different from swapping crypto.
Essentially, when you swap a token, you typically use a decentralized exchange that directly exchanges your crypto for the one you want, whereas when you trade, you are buying or selling cryptocurrencies. While the core outcomes might be the same, trading is quite different from swapping.
Let us consider a scenario where you hold a certain number of crypto A, and your friend holds a certain number of crypto B. You could both agree on a rate of exchange and trade each other the crypto. That is essentially how crypto trading works, but for obvious reasons, it's very unlikely to be considered a viable option.
Most cryptocurrency exchanges today execute trades using an order book to meet crypto trading demand. If anyone is selling the crypto you want, you can buy it at the asking price. The quantity available, the trading pair, and fees are various factors why most users prefer to swap instead of trading their crypto.
Swapping is generally a lot more versatile, faster, and easier than trading. A decentralized exchange (DEX) uses what is called an automated market maker (AMM) to allow assets to be swapped using liquidity pools by managing the price and quantity of assets being traded using smart contracts. Decentralized exchanges offer various coin pairs, where you can choose the tokens you are planning to swap are supported. If you do not find the exact pair, you might have to swap to a more popular coin like USDC, DAI, ETH, BNB, or SOL before finally swapping to the token you want. DEXs normally do this by maintaining various liquidity pools made up of two tokens, users act as liquidity providers when they deposit their tokens into the pool to receive pool tokens and earn rewards in form of fees when other users use the pool to swap tokens.
Another popular use case is to bridge crypto across chains. We will explore cross-chain bridges in a separate guide.
Crypto is intended to fulfill various roles in Web3, and to enjoy the full spectrum of offerings, you will want to swap your tokens for any number of reasons. We've covered some popular reasons below.
While these are some of the main factors for which you will want to consider swapping, there are many more reasons you'll find in your journey. Now that we have explored the core concepts, and reasons, let us dive into the choices you have to swap in the next section.
While swapping might be one of the most common actions in crypto, you can do the same on either DeFi or CeFi. More traditional exchanges or centralized finance (CeFi) offer you the option to swap crypto only after you are a verified user after KYC, and tend to retain the actual ownership of the crypto assets you are trading. Not to mention the sometimes arbitrary listing and delisting of some crypto assets. CeFi platforms usually trade your tokens like we described above, and often end up executing multiple orders to meet your requirement, potentially increasing the final fee for the transaction.
On decentralized finance (DeFi) platforms, a swap is only accepted if it can be fulfilled immediately. This means the liquidity pool for the token pair exists, the fees are transparent, and the volume of the transaction can be met.
This guide will explore the Decentralized Finance (DeFi) approach to crypto swaps. Since there are many DeFi apps that offer various coin pairs, platform fees, and choices, we will show you how you can use the Frontier Wallet to quickly, conveniently, and safely swap between over 4000+ crypto assets.
You will find the Frontier Wallet has inherently built-in many of the key actions you will want to do in Web3. Swapping crypto is one of the most popular features in Frontier, allowing you to swap using your mobile device anywhere, anytime. Once you have activated your multi-chain crypto wallet, you can explore many of the support swaps across various supported blockchains. To simplify your crypto experience, we regularly update and add new tokens and services to the wallet after a strict verification process.
When you swap in your Frontier Wallet, you benefit from:
To swap using your Frontier Wallet, you need to first switch to the desired wallet on the appropriate network. Once there, and you have confirmed you have enough of the crypto you want to swap and enough of the native cryptocurrency to pay for any gas fees, you are all set to get started.
Frontier Wallet also makes it super easy to track your activity and calculate the average price of your purchases. Just tap on any crypto to look into the history of transactions and a price graph at any time.
This is one of the safest, simplest, and fastest methods to swap crypto. In case you wish to swap directly using a different method, you can also consider using Frontier's in-built DeFi browser.
Frontier Wallet also has verified dApps integrated into the app via the Explore and DeFi browser features. To experience this, tap into these sections and tap on a dApp of your choice, and your Frontier Wallet will be automatically linked, allowing you to approve each transaction safely.
If you do not see the dApp you wish to use in the app, you can always use your Frontier Wallet's WalletConnect feature to connect with dApps.
Please ensure you have prior knowledge of these dApps, and trust them before connecting to them. Also make sure you review the permissions requested before approving them. To connect via WalletConnect, you only need to select WalletConnect as the option on the dApp, and then either search and select Frontier Wallet from the list, or use the QR code to connect. To access your Frontier Wallet's WalletConnect feature, simply tap on the top right icon for it, and get started. You will need to remain on this screen to review and approve transactions on the dApp.
We hope you enjoy the swapping experience on Frontier. Tweet us at @FrontierDotXYZ when you complete your first swap on Frontier to get some 🧡
Hello! I'm Emma, and I enjoy learning and sharing what I learn about Web3. As part of the community team at Frontier Wallet, I get to share exciting updates about the latest innovations with you.