DeFi Degens: How to Swap on a DEX
Starting out in DeFi can be a little overwhelming and that’s why I’m creating content that will ease you into it. My goal is to one day turn each and every one of you into complete DeFi degens, with the financial freedom to do whatever you want.
Let’s get started.
Today, I would like to teach you how to swap for any supported token on your DEX (decentralized exchange) of choice. This will require you to take your crypto off of a centralized exchange, into your wallet (MetaMask), and onto an AMM (automated market maker).
I have found that many people that are new to crypto, find this to be one of the scariest aspects of using DeFi. You are essentially leaving the “safety” of a centralized exchange and taking ownership of your tokens. In time, you will learn that this is probably the most important step of your Web3/crypto journey.
What many people fail to realize is that when you have your tokens on a centralized exchange, you don’t actually have custody of them. If the exchange wanted to lock you out of your account, removing access to your funds, it would be 100% in their right to do it. By placing them in your own wallet/cold storage, you are not only decentralizing your portfolio but are also expanding your profit-gaining opportunities immensely through staking and yield farming.
On-Ramp / Off-Ramp
The first step to entering the wonderful world of DeFi, is leaving the world of fiat currency — unfortunately, you need to use fiat to achieve this.
In this example, I am going to use the Crypto.com (CDC) app. I have found that CDC has been one of the best exchanges to work with, as they are easy to add funds to, offer withdrawals to almost every chain, and carry a ton of different tokens that other exchanges do not.
I will also be using the Cronos chain as it utilizes CDC’s native token (Crypto.com coin — now known as Cronos) for swaps and transaction fees. Many of these instructions will work for other exchanges, but you’ll have to make sure that you’re using their native token and withdrawing to the correct chain.
Withdrawing Your Crypto to an External Wallet
- Add funds to your Crypto.com account and purchase some CRO (Cronos) tokens.
- Once you have some CRO, click on “Accounts” down at the bottom and then click on Cronos.
3. Click on “Transfer”
4. On the pop-up from the bottom, click on “Withdraw” and then “External Wallet.”
5. This will then bring up your Withdrawal Whitelist. This is where you will want to add your MetaMask address. Click the + symbol in the top-right of the app, then “Wallet Address,” then finally, click on Cronos (CRO).
6. This will take you to a “Wallet Address Details” page. This is one of the most important pages you will interact with when withdrawing funds. It will determine what address you send your funds to, and on what chain they will be sent.
First select the Cronos network, as this will be the network that the AMM (MadMeerkat Finance) we will be using operates on.
Then copy your address from MetaMask and paste it into the section that is labelled as “CRO Wallet Address (CRONOS).”
You also may need to add the Cronos network into your MetaMask to see the funds that you’ll be transferring. The easiest way to do this is to connect to a dApp that currently operates on the Cronos chain. When you connect your wallet, it will ask you to import the chain — follow the instructions and you’ll be able to see all of your Cronos chain tokens.
Another option is using a different RPC. Do a quick Google search and you’ll be able to find the instructions on how to add any chain you would like to your MetaMask.
For security reasons, CDC will require a 24 hour waiting period before you can send funds to this address. Thankfully, this only applies to the first time you do a withdrawal, all future withdrawals will be processed automatically.
To withdraw your crypto from CDC, click on the token in the CDC app and then click “Transfer” at the top. A pop-up will slide in from the bottom and you will then want to click “Withdraw,” followed by “External Wallet.” This will then bring up your “Withdrawal Whitelist” which will have the MetaMask address you previously added.
Click “Withdraw,” type in the amount of Cronos you would like to send to your wallet and then click the “Withdraw” button.
The transfer can take anywhere from a few seconds to a few hours.
Once the tokens arrive, you will see them appear in your wallet.
ProTip: If you want to stay safe and make sure you didn’t screw anything up, only send a small amount for a test transaction. If you happened to add an incorrect address, you’ll only lose a small amount of your capital.
Swapping for Tokens on a DEX
To show you how this is done, I am going to use MadMeerkat Finance (mm.finance) but every DEX is very similar and will function in a very similar way.
The first thing you will want to do is connect your wallet. To do this, click the “Connect Wallet” at the top-right corner of the page, choose the type of wallet when the pop-up appears (we are using MetaMask), and sign the authorization in your wallet when it appears. This will allow the exchange to interact with your wallet but not access your funds (until you sign an authorization to do this).
Once you are connected to the dApp, you will see the “Connect Wallet” button change to a button that contains your wallet address. You will now be able to interact with the different functions of the DEX.
ProTip: When using DeFi you need to be very careful and read all requests very carefully. If you happen to connect to a malicious dApp and give it the authorization to remove your funds, you could lose everything. Do your own research and triple-check that you are dealing with a trustworthy protocol.
Making the Swap
Hey Degen, you’re doing great!
You got your tokens off of the centralized exchange, decentralized yourself by putting them into your wallet, connected to a decentralized exchange, and now you can swap for any token offered on the exchange.
Let me show you how.
Click on the “Trade” function on MM.Finance and you will be taken to the “Exchange” section of the DEX.
This section will allow you to trade your Cronos tokens for anything else available on the dApp. Some people choose to trade for tokens they can stake or earn a yield on (I will go over this in a future blog post), while others just use this function to hold stable coins (USDT, USDC) in a location that no one else will be able to access.
To trade for another token:
- The top section of the exchange section is the token that you are currently holding in your wallet.
- The bottom section is the token you would like to trade for.
In this example, I have chosen “USDC” as the token I am currently holding and “MMF” as the token I would like to exchange for. Since USDC is a stable coin pegged to the US dollar, 10 USDC is equal to $10.
3. This area will tell you how much each of the 2nd tokens will cost you to purchase with the 1st token. In this example, you can buy 1 MMF token with 0.883688 USDC.
4. This area gives you the details of your transaction. “Minimum received” is the minimum amount of MMF tokens you will receive when you click “Swap.” “Price Impact” is the difference between market price and the quoted price. “Liquidity Provider Fee” is the fee that is paid to the DEX for making the trade. The bigger the trade, the higher the fee becomes.
When you click “Swap” a pop-up will appear for you to confirm the swap transaction. Once confirmed, the DEX will take your USDC tokens, give you MMF in return and commit all of the changes to the blockchain.
Each transaction is tracked on the blocks and you can see them by going through your wallet and viewing “Activity”. Most DEX’s will also have a pop-up that will tell you if the transaction was successful or if it failed, along with a link to the transaction on the blockchain.
ProTip: Every transaction you make on the blockchain will require the use of “gas.” This fee is paid with the native token of the blockchain (in this case it is Cronos) and is generally fairly inexpensive. Ethereum may be the only exception where due to its popularity and architecture, gas fees can get to be very high. Try to keep gas fees in mind when using DeFi because they can add up quite quickly.
First Step Complete!
There you have it!
You have learned how to swap tokens on a decentralized exchange and can now consider yourself a DeFi novice. You’re not a degen yet, but with my help you’ll get there eventually.
In my next blog post, I will go over how to single-stake tokens on a DEX to earn very lucrative staking rewards. This is where things get really fun.