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💸 What is Trade

Token Swap​

Token exchange on SwapX is a peer-to-peer asset exchange achieved entirely through blockchain smart contracts.

Core Mechanism: Non-Custodial Trading​

Decentralized exchange ensures you maintain full control of your assets:

  • User Control: Users always control their private keys via personal wallets (like MetaMask).
  • Direct Settlement: Assets are not deposited into the exchange. Smart contracts complete the settlement directly on the blockchain.

Exchange Implementation Methods​

SwapX utilizes the AMM model, contrasting with the Order Book method:

MethodMechanismPricingExample
AMM ModeBased on Liquidity PoolsPrice is calculated automatically by the ratio of tokens in the pool, following a formula like $x \* y = k$.SwapX (Uniswap V2/V3)
Order Book ModeOn-chain order matching of buy/sell requests.Price determined by the best match between bid and ask orders.dYdX

SwapX Trading: Token Exchange on SwapX is a simple method where liquidity comes directly from the liquidity pools created on SwapX (https://swapx.exchange/pools).

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💸 Exchange Fees​

When you swap (trade) tokens on the SwapX exchange, you pay a transaction fee based on the liquidity pool type used for the swap.

Liquidity Provider Fees​

  • Fee Rate: A fixed fee of 0.3% is charged for swapping tokens.
  • Distribution: This fee is instantly shared by Liquidity Providers (LPs) in proportion to their contribution to the liquidity reserve.
  • Mechanism: The swap fees are immediately deposited into the liquidity reserve. This increases the total value of the pool, thereby increasing the value of the LP Tokens as a payment to all liquidity providers proportional to their pool share. Fees are collected when LPs burn their tokens to redeem their proportional share of the underlying reserve.

Protocol Fees​

  • Current Status: There are currently no protocol fees.
  • Future Potential: A 0.05% protocol fee may come into effect in the future.
    • This fee is equivalent to 1/6 of the 0.30% fee (approximately $16.6).
    • Recipient: If the feeTo address is not the null address (address(0)), the fee is valid, and the feeTo address is the recipient.
    • Impact: This amount does not affect the fees paid by traders but does affect the net amount received by liquidity providers, as a fraction of the 0.3% is diverted to the protocol.