What Is Quick Swap?
May 03, 20226 min read
About Quick Swap
Quick Swap is the largest and most popular decentralized crypto exchange (DEX) in the Polygon network. In turn, Polygon is a Layer 2 Ethereum scaling solution that seeks to solve the problem of scalability and high gas fees in the Ethereum network. Thus, while Polygon strives to solve the issues of Ethereum, Quick Swap seeks to solve the issues of Uniswap (Ethereum-based DEX). Furthermore, thanks to a specially designed bridge, traders can easily transfer ERC20 tokens from the Ethereum network to the Polygon network and access fast and cost-effective trading.
To date, Quick Swap is in the top 20 DEX according to CoinMarketCap and is one of the most significant projects in the Polygon network. The exchange provides the following services:
- token exchange;
- fiat-to-crypto purchases;
Like most decentralized exchanges, Quick Swap has moved away from such a thing as an order book. Instead, it operates based on an automated market maker protocol and liquidity pools.
What Is AMM?
An Automated Market Maker (AMM) is a decentralized exchange protocol based on a mathematical formula for determining the price of assets. Instead of using an order book, as on a traditional exchange, assets are valued according to a pricing algorithm. In simple words, for example, on a Binance, the user places a buy order at the price that is beneficial to him, and the transaction is made when a counterparty appears ready to sell at the set price. In the case of AMM, the smart contract independently determines the price according to a specific formula. This formula may vary depending on the protocol.
For example, Quick Swap (like Uniswap) uses x * y = k,
where x is the amount of one token in the liquidity pool, and y is the amount of the other. In this formula, k is a fixed constant, meaning that the total liquidity of the pool should always remain unchanged. AMM works similarly to a CEX in the sense that there are trading pairs — for example, ETH/DAI. However, you don’t need a counterparty (another trader) on the other side to make a trade. Instead, you interact with a smart contract, thanks to which transactions are made instantly and without intermediaries.
How To Swap Tokens On Quick Swap?
In order to use Quick Swap, you do not need to go through the registration and KYC process. Instead, simply connect your wallet, for example, MetaMask or Trust Wallet. By default, these wallets use the Ethereum network, but if you want to swap tokens on Quick Swap, you will need the Polygon network. If you have a browser extension, when you open the “Swap” tab, the exchange will allow you to connect a wallet and “Switch to Matic”. The swap process on Quick Swap is straightforward and fast. The only thing is to make sure that you have enough tokens to pay the fee — 0.3%. If everything is done, follow the instructions below:
- In the “From” window, select the token you wish to sell.
- In the “In” window, select the token you wish to buy.
- Enter the number of tokens you want to swap.
- Click the “Exchange” button and confirm the transaction in your wallet.
Liquidity pools resemble a bank in which assets are stored provided by liquidity providers. The higher the liquidity, the better and more accurate AMM works. Anyone can become a liquidity provider. The user can either add liquidity to existing pools:
- Navigate to the “Invest” section.
- Click “Add Liquidity”.
- Select two tokens that you want to add to the pool.
- In the “Input” line, enter the quantity.
- Confirm the operation in your wallet.
In addition, if you have not found a suitable asset, you can also create your own liquidity pool via the “Create a pair” button. For maximum income, deposit assets in equal amounts.
For adding liquidity, the protocol rewards the liquidity providers with 0.25% for all trading operations performed within the pool in proportion to your share in the pool. In addition, LPs receive LP tokens (QUICK-V2) that express their share in the pool.
Tokens of liquidity providers can be used in yield farming. To do this, liquidity providers need to go to the “Farms” section → “LP Mining” and choose the pool they provide liquidity. The information about the pool shows its current profitability: the amount of remuneration per day, fees collected, and the total annual interest rate (APY).
In the same section, “Farms” → “LP Mining” at the very top of the page, users can see the Dragon’s Lair “QUICK-dQUICK” staking pool. Clicking on the “Manage” button will open a page where you can stake your QUICK tokens. It is enough to simply connect the wallet, after which the available number of tokens that you can stake will be displayed in the tab. By adding tokens to the staking pool, users receive Dragon’s Quick tokens (dQUICK), representing their share in the staking pool. Staking rewards depend on the volume of trading fees. So, as already mentioned, a fee of 0.3% is charged for each transaction on Quick Swap, and 0.04% is distributed among the stakers. Moreover, besides the above-mentioned remuneration, the exchange provides additional QUICK rewards. APY varies and depends on the trading volume, the price of the QUICK token, as well as the number of staked tokens, and the duration.
In the “Farms” section, users can also see the Dragon’s Syrup staking pools. With this feature, you can select one of the available tokens, add your QUICK to the chosen staking pool, and receive a portion of the third-party tokens.
To date, Ethereum has not yet switched to the PoS consensus algorithm, and networks such as Polygon can significantly improve the user experience by providing low fees and high speed. Quick Swap is one of the most outstanding projects built at the Polygon platform. In addition, compared to the well-known Uniswap, Quick Swap allows you to trade ERC20 tokens much faster and cost-effectively.
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