What Is a Token Swap?

DeFi has given unprecedented freedom in financial operations. One of the most prominent things is Decentralised Exchanges (DEX) offering Automated Market Making (AMM) for token swaps removing any centralized exchanges.

DeFi has opened up new possibilities for financial transactions, and one of the most significant developments is the introduction of Decentralised Exchanges (DEXs) that offer Automated Market Making (AMM) for token swaps, eliminating the need for centralised exchanges.

The ability to swap tokens within a blockchain network or between two different blockchains gives DeFi users a wide range of options for utilizing their crypto.

The Notum App offers a crucial swapping tool that allows users to instantly swap one token for another right within the app, in a 1-click manner.

How Token Swap Works

At the heart of the swapping mechanics are Automated Market Makers (AMMs), a type of decentralised exchange (DEX) that uses mathematical formulas to determine the price of tokens in a liquidity pool.

As you initiate your defi swap, the AMM adjusts the supply of the tokens in the pool based on the trade, which in turn adjusts the price. The smart contract acts as the counterparty instead of an intermediary in traditional banking.

Example:

For instance, let's say you hold Ethereum ($ETH) but want to participate in a defi staking platform that requires BNB, the native cryptocurrency of the Binance exchange. On Notum, you can directly swap your ETH for BNB by selecting the ETH you want to exchange.

The platform shows you how much BNB you’ll get, based on the current liquidity and pricing in the pool. When you complete your swap, your transaction is recorded on the blockchain.

Why Swapping Tokens?

Let’s start with liquidity, as it matters. It refers to how easily one can trade an asset without impacting its market price. When liquidity is high, order books are in high demand, so traders can buy and sell without affecting the asset price.

On the contrary, when liquidity is low, orders for the asset in question are insufficient, meaning that a trader will suffer from slippage to fill an order.

Slippage and liquidity are working together. While liquidity refers to overall volume, slippage reflects the difference between the quoted market price and the closest available order price at which an asset can be traded for a definite volume.

On decentralised exchanges, anyone can provide liquidity and become a liquidity provider (LP) by issuing an equal split of tokens to a trading pair’s liquidity pool. By providing liquidity, providers get rewards from fees earned from the trading pair.

Users of DEXs can access coins not listed on centralised exchanges and can set the maximum slippage they can take on a trade.

Token Swap on Notum: Key Features

Notum’s cross-chain swapping feature enables users to effortlessly exchange tokens across supported blockchain networks in a 1-click transaction.

Our cross-chain swaps eliminate the need for users to seek out a swap external to the platform. They can perform any swap to access assets and liquidity needed to participate in various DeFi strategies within and beyond the Notum App.

The Notum’s swap feature is running on top of centralized exchanges, which provide quick and cost-effective cross-chain transactions. We are working on adding decentralized exchanges to ensure better rates for swaps on one chain, and lower fees that are not subject to high slippage.

You can choose to swap from 17 networks including Ethereum, Optimism, Binance Smart Chain (BNB), Arbitrum, and other popular chains.

If you want to use new dAps, rebalance your investment portfolio, or just exchange your tokens — token swapping offers a powerful tool for exploring the decentralized financial landscape.

How to Swap on Notum: Step-By-Step Guide

1. Visit ‘Swap’ page on Notum app.

2. Connect your wallet to the platform. In the “Asset to send” choose the network from where you want to swap an asset, and the asset on this chain, that you want to swap.

3. In the “Asset to receive” choose the network where you want to receive an asset, and the asset on this chain, that you want to get after the swap.

4. In the “Asset to send” enter the amount of cryptocurrency you want to swap, in the “Asset to receive” you will see the amount of assets you will receive after the swap.

5. Press the “Swap” button once you are satisfied with the provided swap quote and in the opened window confirm the “Send” transaction.

6. Once the transaction is confirmed you will see the “Success” message on the screen. Shortly, you will see the updated balance on the overview tab.

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