By Nathan Ferguson
A decentralized application created on the Polygon blockchain network that allows users to swap ERC-20 coins is known as QuickSwap. It is a layer-2 dApp. The fundamental cornerstone of the growing suite of decentralized applications is formed by decentralized exchanges. These exchanges are applications based on blockchain.
Here is a guide article that will explain to the readers about working and utility of QuickSwap and how it can be used as an innovation for decentralized applications.
Understanding QuickSwap
Users can swap tokens through the QuickSwap decentralized exchange. It uses an automated market maker (AMM) model for this purpose. In 2020, Sameep Singhania founded the layer-2 decentralized exchange on the Polygon network. It ensures permissionless, censorship-resistant and trustless crypto trading.
It is a decentralized finance liquidity protocol that helps add token pairs and earn transaction fees from the pool participants. Users do not need any order book to exchange their tokens containing any combination of ERC-20 tokens.
Anyone on the pool can build a liquidity pool and earn by collecting participant transaction charges. The platform is similar to UniSwap, the actual founder of the automated market maker. However, unlike UniSwap, QuickSwap is created on a layer-2 scaling solution.
Working of QuickSwap
Users can use the automated market maker to swap, stake and supply liquidity for token assets. A few of the critical features of QuickSwap are discussed below.
Liquidity Pools
The collection of digital assets helps in trading on decentralized exchanges. These liquidity pools provide the required liquidity for decentralized trading, helping the traders to utilize the exchanges. The liquidity providers in the pool receive a portion of the transaction charges, about 0.25% of the trading fee on the platform.
QuickSwap allows users to swap ERC-20 tokens, which automates the process through smart contracts. It helps calculate the second token amount received by the user based on its market price.
Automated Market Makers
The automated market maker model helps in providing liquidity through QuickSwap and determining the prices of the asset. It acts as a robot that determines the prices of any two assets. It provides instant access to liquidity as an algorithm can always propose a price for the user. It helps the users determine the prices through an entire mechanism.
Token Swapping
The swapping mechanism helps in exchanging one crypto asset for another. It saves the users time and money, helping the traders earn profit through the market’s price movements. QuickSwap allows users to trade tokens with minimal transaction fees and almost no gas fees.
Impermanent Loss
It is a possible risk associated with users dealing with QuickSwap and other decentralized finance platforms. When a token is provided to a liquidity pool, traders may face an impermanent loss.
Using QuickSwap to Swap Tokens
Traders can swap tokens without the involvement of any mediating body. QuickSwap is a decentralized exchange that helps yield farming, liquidity and swapping tokens. Swapping tokens through QuickSwap is a convenient process that requires a few steps.
Users must open the QuickSwap website through the browser and integrate it with a wallet supporting Polygon. After that, he has to choose the currency pair to be swapped. Users can choose any ERC-20 token and add both tokens to be swapped and received. The last step is to complete the procedure by choosing the “Swap” option.
Future of Decentralized Applications
The increasing interest in decentralized applications has led to the creation of hype for decentralized exchanges. Users can safely trade their crypto assets utilizing a transparent and secure system that does not require any mediating body. QuickSwap offers multiple benefits to traders providing them with increased functionalities and liquidity. Moreover, it also allows the users to execute their trade procedures, keeping the user’s identity intact.
Conclusion
Decentralized exchanges such as QuickSwap are helping to improve the users’ trading experience compared to the centralized ones. They provide traders with a user-friendly interface and convenient trading environment, making the decentralized application more accessible to the users.