QuickSwap is a decentralized exchange (DEX) built on the Ethereum sidechain Polychain, letting users swap ERC-20 tokens. The platform was founded in 2020 by Sameep Singhania. It promotes decentralization principles by ensuring permissionless and trustless crypto trading.
QuickSwap provides liquidity pools for investors to inject their crypto to earn transaction fees collected from users swapping tokens. It is worth highlighting that, being a permissionless protocol, QuickSwap allows anybody to create a liquidity pool for their new token.
The DEX has its native token called QUICK, which has two use cases, including staking and governance. Holders of this token obtain the right to vote on proposals concerning QuickSwap.
QuickSwap Vs. Uniswap
Before we draw comparisons between the two, let’s first understand what’s Uniswap.
Uniswap is another decentralized exchange built on the Ethereum blockchain. Many consider QuickSwap a fork of this DEX since it adopted Uniswap’s liquidity pool model.
Being an Ethereum-based protocol, Uniswap processes transactions at considerably high fees compared to Polygon-based QuickSwap, which offers faster transactions at a relatively low cost.
How Does QuickSwap Work?
QuickSwap employs an Automated Market Maker (AMM) model to offer token pools for users to stake, supply liquidity, and swap crypto assets.
Here are the key features that make up QuickSwap’s infrastructure:
Simply put, a liquidity pool is a collection of crypto assets that facilitates trading on a decentralized exchange. To supply liquidity to QuickSwap’s pools, users are required to lock their crypto into the DEX’s smart contracts so others can use them to swap various tokens. As a liquidity provider, you will earn 0.25% of the transaction fees.
Unlike centralized exchanges that use the order book trade method to swap tokens, QuickSwap, and other DEXs have automated the swapping process to allow users to exchange one token with another quickly. So how do you swap tokens on QuickSwap? You must first send your chosen token to the platform’s smart contract, which will then calculate the amount of the second token that you will get based on the price determined by the QuickSwap AMM model.
Automated Market Maker
As mentioned earlier, QuickSwap’s AMM model dictates the prices of the locked crypto assets. An AMM is like a financial robot that proposes prices for two cryptocurrencies based on the number of tokens available in a particular liquidity pool.
So far, we already know that QuickSwap is a decentralized platform for swapping tokens. But why would anyone want to swap assets? There are many reasons. First, traders may exchange tokens in case they anticipate a surge in the price of the second token. Also, QuickSwap requires users to pay transaction costs using the Polygon’s native token MATIC. So a holder of AAVE tokens, for example, will have to swap a portion of their holding to MATIC for the transaction to be completed.
How to Use QuickSwap
Here is how you can exchange tokens on QuickSwap:
Step 1: Open QuickSwap in a browser, then connect your Polygon-supported wallet like MetaMask. Make sure there is enough MATIC to complete the transaction.
Step 2: Click the ‘Swap’ tab and choose the token pair you wish to swap.
Step 3: Now click the ‘Swap’ button to initiate the token exchange. After confirming the transaction, you will receive the new token in your wallet.