Do you have, let’s say, Ether (ETH) in your wallet but need to pay something in a different cryptocurrency? Swaps let you directly trade one coin for its equivalent value in another.
Sure, you can take the long road and convert part of your crypto to dollars, then use that to buy the coin you want. Or you can do a swap - faster and cheaper.
Simple and secure, swaps reduce the number of steps AND avoid paying transaction fees twice.
🔄 How does swapping work?
🏦 Swapping with a centralized exchange
Using a centralized exchange like Coinbase or FTX for swaps is a possibility, but be ready for a somewhat long-drawn process. To begin, you'll need to set up an account and provide personal information. Once this is done, you can transfer your cryptocurrencies to the exchange platform and initiate your swaps. Remember, after the swap, the new crypto will reside on the exchange platform, so you'll need to transfer it back to your wallet unless you choose to leave it there.
In essence, that's three separate transactions - sending, swapping, and sending again. Each transaction incurs a fee, which adds up.
🤝 Swapping with a decentralized exchange
Decentralized exchanges (DEXs) do not require you to create an account - instead you will be asked to connect your crypto wallet. This means that the exchange you are using is not going to keep your crypto on their platform. Decentralized exchanges maintain “pools” of different types of coins and tokens so that users can swap from one coin to another by interacting with smart contracts.
Though DEXs provide convenience, they can occasionally suffer from liquidity issues, potentially resulting in unfavorable pricing. Furthermore, there may not be a pool available for the specific swap you want to make.
The process of swapping on a decentralized exchange can vary from DEX to DEX, but generally, you have to make one or two transactions: an approval transaction that allows the DEX to move the coins you’re swapping, and then a swap transaction to actually execute a swap. This approach is more efficient than using a centralized exchange, with a smoother process overall.
📱 Swapping with Zelus wallet
Zelus wallet integrates swaps without having to leave the app - so you don’t need to deal with unfamiliar interfaces. Even better, when you initiate a swap with Zelus, the app automatically searches for the best price across multiple decentralized exchanges.
In the app, go to the Wallet section. You can initiate a swap in two ways:
tap on the central button and choose ‘Swap’, or
tap on the coin you want to swap from, then choose ‘Swap’.
Select the coins that you want to give and receive (in the example below, swapping from ETH to MATIC -» I give some of my ETH and I will receive the equivalent amount in MATIC) and the amount of crypto from your wallet that you want to swap.
You will then be shown details of the swap transaction, including the type of swap (same-chain or cross-chain), the minimum amount you’ll receive and the fees involved. For some swaps Zelus wallet will ask you to sign a one-time approval for the DEX to access your crypto - this case is shown in the screenshots below.
After tapping on ‘Preview swap’ you will see a clear summary with all the details of the transaction. If everything looks right then you need to confirm the swap by tapping on the ‘Swap now’ button.