What’s Defi Token Swapping and how do you do it?
Swapping is the most common word that you will encounter upon entering crypto’s DeFi market. This is not by pure coincidence. In fact, swapping is the primary mode of operation in decentralized finance.
When exploring financial instruments in your Defi journey, knowing how to swap tokens is a must. In this article we will cover basics of token swap and further your understanding on the highly popular exchange method.
What is a token swap?
A token swap is a process during which investors swap their existing tokens for another using a decentralized exchange. Do you own Bitcoin and want to own Ethereum? You can simply perform this transaction by going to any DEX and swap your BTC for ETH.
Token SWAP is entirely regulated by smart contracts. Many DEX exchanges are non-custodial and will not require ownership of your assets to move funds. Instead, they rely on liquidity delivered by users via yield farming or liquidity mining.
Are DEX Token Swaps Better Than CEX Trading?
Currently, token swaps are highly coveted and Swapping tokens on DEX is perceived to be better than on CEX trading. When swapping tokens on DEX, Know Your Customer (KYC) parameters are not needed. Swapping tokens on DEX keeps your identity almost completely anonymous. Also, there are no limits on fiat value one can swap during a single day, compared to centralized exchange’s (CEX) withdrawal and deposit limits.
How to Swap Tokens
Swapping tokens through DEX is rather simple and easy. All you need is some knowledge about the tools. This guide will use the DEX XcelSwap and MetaMask web wallet as examples to SWAP tokens. The guide covers converting Bnb into an XLD token. No matter which tokens you choose, the process is executed the same way.
Let us learn the step-by-step process to swap defi token XLD with XcelSwap:
Step 1: Open the official website of XcelSwap i.e. www.xcelswap.com. Click on the ‘Connect Wallet’ button at the top right of the screen.
Step 2: Click on the MetaMask icon & once the drop-down menu appears. Enter your MetaMask password and click connect.
Step 3: Go to the ‘Swap’ section of Dex, at the right side of the screen.
Step 4: Now select ‘BNB’ in the send box and “XLD’ on the receiver box. You can use other cryptocurrencies instead of BNB as well.
Step 5: Select the desired value of $BNB that you want to swap with $XLD. Defining an amount of one token will auto-generate the amount for the next token at the market value. We recommend it to set the slippage between 0.5% to 5%.
Step 6: Click on the “confirm swap” box.
Congratulations! You have successfully swapped your defi token XLD from XcelSwap.Token swapping is the easiest form of trading cryptocurrencies.
The process is suitable for beginners, decentralized, and carries with itself many advantages. Moreover, DEXs that provide such services require no complicated account registrations, identity verifications, and other measures.