Liminal secures FSP license from FSRA in ADGM   Read more

How to get started with Crypto Swapping? And what exactly is a Crypto Swap?

| November 17, 2023

Share this article

In crypto markets, thousands of crypto projects and associated tokens are designed to serve different purposes. But, to switch from one crypto holding to another, you have to sell your existing tokens for fiat and then buy another token using fiat. The entire swapping process from crypto-to-fiat and fiat-to-crypto could be more efficient and affordable. This is what crypto swap solves. The swap exchange crypto platform makes swapping faster and easy for everyone.

Key Takeaways

  • Crypto swaps let you trade one cryptocurrency for another without involving crypto-to-fiat exchange.

What is cryptocurrency swapping?

Cryptocurrency swapping refers to exchanging one digital asset for another on a decentralized exchange platform. It involves swapping one cryptocurrency for another without needing an intermediary, such as a bank or financial institution. This process is facilitated by smart contracts, which are self-executing contracts that automatically execute the agreement terms between the parties involved.

Unlock the potential of digital assets for your institution

There are several reasons why people engage in cryptocurrency swapping. One of the main reasons is to diversify their investment portfolio. By swapping their cryptocurrency holdings, investors can mitigate their risk exposure and potentially increase their returns. Another reason is to take advantage of market opportunities, such as trading one cryptocurrency for another that is expected to increase in value.

Cryptocurrency swapping can also be used to convert one cryptocurrency into another for practical purposes. For example, if a merchant only accepts a specific type of cryptocurrency as payment, a person can easily convert their cryptocurrency holdings into the required currency using a swapping platform.

Overall, cryptocurrency swapping provides a fast and convenient way for investors to exchange digital assets without relying on traditional financial institutions. However, it is important to note that cryptocurrency swapping is not without risks, and investors should always do their research and exercise caution before making any trades.

Secure and manage your digital assets with Liminal

Swap Crypto Assets on a Decentralized Exchange.

A decentralized exchange is also referred to as DEX. DEXes are designed to operate without a central governing authority. Rather than relying on a centralized entity, crypto swap platforms such as DEXes instead rely on self-executing smart contracts for regulation and operations. The DEX infrastructure is peer-to-peer. It allows crypto asset holders to directly exchange cryptocurrencies without involving any intermediary such as a financial institution or government. Out of thousands of DApps, cryptocurrency swap DEXes can be identified by their unique names, which usually include the word “swap”. Some of the well-known examples of crypto swap DEXes include Uniswap, PancakeSwap, and SushiSwap.

Most DEX lets you swap crypto directly from your favorite self-custody wallet. Plus, DEXes such as Uniswap make it easy for you to maintain full control over your digital assets.

Upsides of DEX

  • With crypto swap DEXes, your personal information stays private. You get improved anonymity while transacting via DEXes.
  • With DEX cryptocurrency swap, you don’t have to trust or involve third-party or external entities. This helps improve the overall security of the transaction, and the underlying blockchain infrastructure makes the transaction tamper-proof.
  • Most DEX crypto swap platforms don’t hold your private keys. Additionally, no third party gets access to your private keys.
  • DEX swap exchange crypto platforms support a wide range of protocols, enabling you to exchange virtually any kind of token.

Downside of DEX

  • To use a swap exchange crypto platform, you are required to have some technical know-how or else familiarity with the crypto space in general.
  • The DEX crypto swap platforms are relatively less user-friendly.
  • When trying to swap crypto tokens of smaller projects and protocols, you are likely to face liquidity issues. Liquidity issues often limit the total transaction size.

Swap Crypto on a Centralized Exchange

CEXes, including platforms like Coinbase and Kraken, are centralized exchanges that are owned and operated by a central organization. These platforms facilitate transactions between users, offering crypto-swapping services that are differentiated by the variety of trading pairs available and the transaction fees charged. Since most users begin their crypto journey with centralized exchanges, these platforms are designed to be user-friendly. However, it is important to note that as a part of the custody service, any cryptocurrency received in the swap will remain under the control of the exchange.

The crypto wallets offered by centralized exchange let you swap crypto without making you navigate complex dashboards. With custodial wallet such as Coinbase wallet, you can easily swap a wide range of popular crypto assets.

Upsides of CEX

  • CEX platforms that let you conduct cryptocurrency swaps are built to support larger trade volumes and offer high liquidity
  • Using the CEX swap exchange crypto platform is relatively easy. It is designed to provide a convenient user experience.
  • To use CEX, you don’t need to have in-depth technical knowledge.

Downsides of CEX

  • You don’t have complete control over your keys with the CEX crypto swap platform. Additionally, you’ve got to share your private keys with a third party.
  • When you swap crypto, the CEX platform determines which trading pairs to make available.

Reasons to use Swap Exchange Crypto:

Now that you comprehend the concept of swapping cryptocurrencies, you may wonder why anyone would desire to do so. What motivates individuals to exchange their existing crypto assets for a different type? Let us explore some of the reasons behind it.

Earning profits

Certainly, generating income is a desirable pursuit that appeals to most individuals. Trading cryptocurrencies like Ethereum, Bitcoin, or Stablecoins can be a lucrative opportunity, given their volatility in price. With proper market timing and a dash of fortune, exchanging your crypto at opportune moments could result in substantial profits.

Portfolio diversification

While some people may not appreciate the swift fluctuations in cryptocurrency prices, diversification is often viewed as a potent tool to mitigate risks. By possessing a small amount of various cryptocurrencies, the effects of price declines can be diminished.

Earn passive income

Are you interested in earning money effortlessly? Some cryptocurrencies support staking, enabling you to acquire more crypto without any additional effort on your part.

Beware of Loss

Engaging in cryptocurrency trading is inherently risky, and this goes beyond security concerns. As previously mentioned, there is a potential for significant profits if you time the market correctly. However, mistakes in judgment could result in significant losses. To minimize the risk, it is advisable to follow some basic rules, such as investing or trading only what you can afford to lose and conducting thorough research beforehand.

Furthermore, swapping cryptocurrencies typically incurs a fee, which may result in a slightly lower return value.


Using a cryptocurrency swapping platform, you can virtually exchange any type of cryptocurrency for any other. You can opt for either CEX or DEX-based crypto-swapping platform. Both are designed to facilitate swapping within trading pairs efficiently.

Related Articles:

More on Crypto

Liminal Custody received initial approval for a VASP license from Dubai’s VARA, paving the way for secure institutional custody services. Learn more. ……
May 27, 2024
As we move toward standardized and regulated usage of digital assets, it is remarkable to see more jurisdictions develop improvised versions of compliance with laws to help individuals and institutions stay safe and resilient. ……
May 23, 2024

Find out what is the Ideal Custody Solution for you