How to Swap Crypto? The Ultimate Guide & Links (2022)
Swapping crypto is one of the most common tasks you will encounter in your investment journey. In this guide, we explore some of the basic concepts, methods, things to keep in mind, and finally some step-by-step guides on how to start swapping using your Frontier crypto wallet.
Sections in this Guide
- Introduction to crypto swaps
- Why swap crypto?
- Swapping methods: DeFi vs. CeFi
- Swapping Crypto on Frontier Wallet
- How to swap on other platforms.
Introduction to crypto swaps
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.
Trading vs. Swapping
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.
Why swap crypto?
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.
Make profitsUnlike traditional finance (TradFi), crypto markets never sleep. This allows you to explore making money by swapping to acquire some crypto tokens when their price is low, and swapping them again when their price appreciates. You can make a tidy profit doing this. But the inherent risks always remain. You'll need to time the prices just right, and there's no guarantee the price you thought was low will not just keep on dipping.
Support projectsWhen you swap to acquire a token, you are also investing in the project and the team behind the token in many ways. You can invest in tokens a lot like you would stocks. If you believe in a decentralized platform or protocol, you can show your support by investing in them. This includes NFT projects and creators. If you are right, you stand to make some huge wins when they succeed. But as any other venture, many are also likely to fail. Hence, it is best to DYOR and invest only when you're comfortable with the risks of swapping into the token.
Diversify holdingsYou can reduce the risk to your investments by swapping your tokens to hold a mix of different cryptocurrencies. This allows your portfolio to benefit from various categories of crypto and hedge against certain risks from being overexposed to just one or few crypto assets. Here again, you'll want to modify the mix based on your unique investor risk appetite and research into each token.
Earn passive incomeDeFi offers you many opportunities to earn from your crypto. Holding certain tokens in your wallet allows you to stake crypto and earn rewards. When you stake, you earn by supporting the underlying protocol or network. Apart from staking, you also have the opportunity to earn by lending, becoming a liquidity provider, and a lot more. You can learn more about these opportunities in our dedicated article on how to earn passive income on crypto assets.
Participate in DAOsMany organizations on Web3 today raise capital by offering a native token to their supporters. Token holders then form the community behind the decentralized autonomous organization and participate in its governance. Each token represents voting power and is much like holding a company's equity. DAO tokens are also used as rewards to incentivize users to help build the project. DAOs are emerging to play a key role in building the future of Web3, and joining the right communities offers a great opportunity to participate. Often the only step you need to join is swapping to own the DAO token.
Payments and businessWhen you interact with various DeFi apps and individuals, you are likely to find they prefer to operate or accept payments only using a certain cryptocurrency. To simplify doing business, buying an NFT, or any other kind of crypto asset, you will often need to swap the crypto you have to get the crypto you need to do what you want.
Transaction feesEvery transaction on the blockchain is powered by people and technology. The popularity and demand for the sometimes limited resources available on the blockchain can make the fees of transacting on them relatively expensive. While many new chains make it a lot cheaper to transact on them, the underlying gas fee, albeit small does need to be paid. This is usually paid in the native token for the chain, for example, $ETH on the Ethereum blockchain and $SOL on the Solana chain. Swapping is a great way to ensure you have enough of the native token in your wallet to pay to perform any action on the network.
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.
Swapping on Decentralized Finance vs. Centralized Finance
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.
How to swap using Frontier Wallet?
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:
- Native support for popular networks, with native wallets for 20+ chains.
- Faster swaps with limited chances of failed swaps.
- Support for various token pairs sourced from multiple DEXs.
- Detailed control over fees, slippage, and price impact.
- Transparent activity tracking with block explorer, notifications, and history.
- Finds you the fastest and cheapest route after checking multiple DEXes.
Option 1: In-app Swap
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.
- Tap on 'Swap' in the home screen of your Frontier Wallet.
- Once on the 'Swap tokens' screen, select the token you wish to swap in the 'From' section, and enter the amount you wish to swap out of your wallet.
- In the 'To' section, select the token you wish to swap into your wallet.
- Pro Tip: You can tap the middle arrow between the section to switch between the from and to tokens.
- Below this section, you will see the 'Minimum received' which shows you the minimum of the tokens you will receive after slippage.
- You can adjust your slippage by tapping on the button on the right.
- Below this, you will also see the current 'Exchange price.'
- Tap on 'Continue' to proceed to the 'Review transaction' screen.
- Here, you will see a summary of the swap before it is executed. Including the wallet used, From and To tokens, Minimum received, Price impact (slippage), and more.
- Also note that at this time, Frontier does not charge any fees for swaps.
- You can also see the present Network fee for the transaction. You have the option to set the fee to low, average, high, or set a custom gas (only recommended for advanced users).
- Based on your Network fee setting, Frontier will estimate the time your swap is likely to take.
- In some cases, you will need to 'Approve' the from token.
- You will be prompted for your six-digit Frontier passcode.
- Your request will be processed immediately. Leave the app open while it completes. You will also receive a notification as the action is approved.
- On returning to the screen, you should see the 'Approved' status. Now you can tap on 'Swap' to complete the action.
- You will again be prompted for your Frontier passcode.
- The next screen should tell you that your swap has been successfully submitted. On this same screen, you can either tap on 'Transaction details' to go the block explorer and review the transaction details. Or tap on 'Go to home' and return to your main wallet screen.
- Once the swap is completed, which should be quick, you will receive a notification from Frontier on the successful swap.
- Your swapped crypto should now arrive in your wallet, if not just pull down to refresh the feed.
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.
Option 2: Swap using integrated DeFi protocols
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.
Swapping on other DeFi platforms
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 🧡