You will have more than 15 Ethereum tokens to trade, including WBTC.
Earn interest by depositing your tokens into Crypto.com’s DeFi Swap liquid pools.
Crypto.com recently launched its DeFi Swap, a decentralized platform for exchanging cryptoassets on the Ethereum network, where you can earn interest by being a liquidity provider. In this guide you will learn all about it.
DeFi Swap by Crypto.com It is a fork of UniSwap V2, the famous Ethereum exchange platform. The way it works is very similar to its predecessor. Firstly, Exchanges are done in a decentralized manner. This is possible thanks to “liquidity pools”, smart contracts where some users store their tokens so that others have liquidity for their exchanges. These liquidity providers are rewarded or incentivized by interest from the commissions paid by other users on the exchange.
In addition to providing liquidity to generate interest, Crypto.com offers an additional incentive or “boost”, which allows you to multiply your profits generated by liquidity funds by depositing CRO (Crypto.com ERC20 tokens) at intervals of 1 to 4 years. In this tutorial we will show you how and how much you can earn.
On the other hand, commissions within DeFi Swap are quite low, establishing a uniform rate of 0.3% for each exchange, regardless of volume. Of course, this is apart from the Ethereum network mining concepts commission that you have to pay for each transaction.
How exchange rates are determined on Crypto.com
You might be wondering if they are decentralized exchanges, how does Crypto.com know what exchange rate to offer? Well, the equation is very simple: it all comes down to the liquidity of the pool. The higher the supply or tokens available, the lower the rate.
A chart explaining how exchange rates work on Crypto.com. Source: Crypto.com
Due to the very nature of the market, exchange rates are self-regulating and balancing with the external exchange rates of the pair being exchanged. This is due to arbitrage, which, in short, uses the difference between the exchange rates of two different platforms to generate profit, trading at a low rate and selling at a high rate. This ends up balancing the balance between Crypto.com and the rest of the exchanges.
The exchange route is shown to you after you select a pair of tokens to exchange.
Also, in order to offer more suitable rates between different exchange pairs, Within the Crypto.com protocol you will have a “Route” to try to get the best rate. What is this route about? Well, if, for example, you want to trade WBTC for CRO, but the fund of this pair has very little supply, you will find yourself with a very high exchange rate. To solve this, Crypto.com’s DeFi Swap will search for a route between different pairs to get the most favorable exchange rate. It remains, for example, to exchange WBTC for ETH, and then from ETH to CRO. You finally have your CRO in your wallet and exchanging it for ETH is a simple procedure to get a better rate.
What is required to use the Crypto.com exchange
For the purposes of this tutorial, we will be using the MetaMask wallet, which is also compatible with Crypto.com. However, you can also use any wallet compatible with WalletConnect.
Regarding the use of the platform, there are a number of countries where Crypto.com is restricted due to local legislation, among which you can find: Bolivia, Cuba, Ecuador, Venezuela and the United States of America. You can see the complete list of unavailable countries here.
How to trade on Crypto.com
The first step is to open the interface to the Crypto.com decentralized exchanges, which you can access from the following relationship.
Main Cover of Crypto.com DeFi Swap. Source: Crypto.com
When you enter DeFi Swap Crypto.com, you will be taken directly to the exchange screen. However, first of all, you will need to link your wallet. To do this, you will need to find the Connect to wallet option. There you will choose between MetaMask or WalletConnect. You connect or login to your wallet, as you would with any other dApp and that’s it.
Select tokens to exchange
Once the wallet is connected, the next step is to select the cryptocurrencies you want to exchange.
Crypto.com DeFi Exchange Form. Source: Crypto.com
In the From field, you will need to display the list of available tokens from the Select Token option to select the one you want to exchange. After that you have to enter the amount you want to exchange.
In the To field, you must repeat the procedure, but this time choosing only the token you want to receive; Automatically, the amount you will receive will be filled in accordance with the changing exchange rate. Please note that the total amount shown is approximate.
When everything is ready, you will see the following information at the bottom:
- Minimum received: In the event that the exchange rate drops sharply right at the time you make the exchange and before the transaction is confirmed online, this will be the minimum accepted amount you can receive. Otherwise, the transaction will be canceled and you will have to make another exchange order with the new exchange rate.
- Price Impact: is the percentage difference between the exchange within Crypto.com and the external market.
- Liquidity Provider Fee: the total amount to pay the exchange commission, bearing in mind that the commission is 0.3%.
- Route (Route): Indicates the route or number of exchanges.
To finish, all you have to do is click Replace, which will open a small box to verify that all the information is correct. After that, the window of the wallet you connected will open to confirm the transaction. Once you’ve done that, all you have to do is wait for network confirmations to see the available funds.
Earn interest with Crypto.com DeFi Swap
As we mentioned at the beginning, a core part of how Crypto.com DeFi Swap works is liquidity pools. There you can deposit and earn interest on your cryptocurrencies.
The way you make a profit is through charging commissions. How does this work? For each exchange a fixed exchange rate of 0.3%, which goes to the pool in general and is distributed among all liquidity providers according to their contribution to the pool. For example: if the pool has a total of 100 ETH and you have deposited 10 ETH, that means your contribution is 10% of the total pool. This means that you will receive 10% of every commission paid.
Form to be a Crypto.com DeFi Swap liquidity provider. Source: Crypto.com
Now, to start being a liquidity provider, you need to locate the Pool option within DeFi Swap and select Add Liquidity.
Within the form that will open, you will have to select a pair of tokens for which you want to provide liquidity.
Something interesting that happens when depositing is that the amount is transferred according to the current market rate. That is, if you want to deposit 8.7 ETH, as in the example in the picture, you must deposit the equivalent of 8.7 ETH to CRO at the current rate. The reason for depositing 2 tokens at once is quite simple and practical: regardless of how much you deposit, the exchange rate will not be affected by a sudden excess of liquidity in one token. Because if you were to deposit just 1 token, you could change the exchange rate.
The above is reflected when depositing, because when you choose a pair of tokens and put the transfer amount in one of the two, the other will be automatically filled.
At the bottom you will see the exchange rate from token A to token B and vice versa. You will also have a share of the pool, or what is the same, how much your deposit takes up within the pool.
When everything is ready, click on Supply, which will open a confirmation box, where you will later need to confirm the transaction from the wallet.
Remember that you can withdraw your tokens whenever you want.
Earn more interest on your deposits with DeFi Swap Boost Crypto.com
Crypto.com’s DeFi Swap offers you the opportunity to invest CRO for a period of 1 to 4 years. This allows you to generate more CRO as well as increase your profit on your deposits in liquidity pools.
Crypto.com DeFi Swap CRO Investment Form. Source: Crypto.com
The minimum amount of the deposit is 1000 CRO, in which case you will not be able to withdraw it until the deadline you have set expires. However, you will not be able to withdraw the deposited CRO until the deadline you specified at the beginning has expired.
Of course, you cannot use this tool to increase without first depositing funds into the liquidity funds. This is because, depending on the amount of CRO deposited and the years selected, you will receive a multiplier that will be applied to the interest generated from your deposits in the liquidity pools.
To use this feature, you must locate the Boost option from the Crypto.com DeFi Swap menu and select Stake and Earn Now.
Here you have to select the deposit amount and the period (Share Period) for which your CRO will be deposited.
Once everything is ready, you will now need to click on Review Stake which will show you a small confirmation box. The next steps are: tick Approve CRO, the option you have to confirm from your wallet, and finally Confirm Stake to finally complete the process.
How much you can earn by investing CRO in DeFi Swap Crypto.com
The resulting multiplier generated from your CRO stakes in Crypto.com’s DeFi Swap is calculated based on the amount of CRO deposited and the years they will “stagnate”.
In the image above you can see a table showing the equivalent of the multiplier you will get depending on the amount you deposit. Remember that you must apply this to the Share of Fund Value that you will see when you make deposits to Liquidity Funds.
However, if you don’t want to complicate your life with manual processes, accounts with the APY option inside the Crypto.com DeFi Swap exchange box. This offers you a calculator to estimate the most approximate value you will generate with your deposits and stakes within the platform.
To calculate your total earnings, simply enter the USD value of all funds you have deposited along with the total amount in the CRO and the years for which they will be “invested”. Source: Crypto.com
Fast, easy exchanges that can also earn interest on your money: that’s what Crypto.com DeFi Swap allows. And if you’ve used Uniswap before, the customization process will be much easier.
The interesting thing here is the ability to generate more tokens without doing anything. It’s basically like a savings account: you deposit it and then wait for your money to earn interest. This is all you need to do inside Crypto.com. Of course, be careful with the amount you pay.
In conclusion, DeFi Swap is still in full growth White paper It was only launched in September 2020 and there are still features to show, such as Bonus Yield, which appears in the White Paper but has not been implemented to date.
Compared to its peers, such as its predecessor Uniswap or Sushi Swap (another well-known exchange), it does not lag behind at all, offering good exchange rates and additional bonuses, which you may not find on other platforms.
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