learn how to trade Ethereum tokens and earn interest

Key facts:

You will have more than 15 Ethereum tokens to exchange, including WBTC.

Earn interest by depositing your tokens in Crypto.com’s DeFi Swap liquidity pools.

Crypto.com has recently launched its DeFi Swap, a decentralized platform for the exchange of crypto assets from the Ethereum network, in which you can earn interest by being a liquidity provider. In this tutorial you will learn everything about her.

Crypto.com’s DeFi Swap is a fork of UniSwap V2, the famous Ethereum trading platform. The way it works is very similar to its predecessor. To get started, exchanges are carried out in a decentralized manner. This is possible thanks to “liquidity pools”, smart contracts in which some users store their tokens so that the rest have liquidity for their exchanges. These liquidity providers are rewarded or incentivized with interest from commissions paid by other users when exchanging.

Along with providing liquidity to generate interest, Crypto.com offers an additional stimulus or “Boost”, that allows you to multiply your profits generated by liquidity pools by depositing CRO (Crypto.com’s ERC20 token) for 1-4 year intervals. In this tutorial we will show you how and how much you can earn.

On the other hand, the commissions within DeFi Swap are quite low, establishing a single rate of 0.3% for each exchange, regardless of volume. Of course, this is outside the commission for mining concepts in the Ethereum network that you must pay for each transaction.

How exchange rates are set on Crypto.com

You may be wondering that if they are decentralized exchanges, how does Crypto.com know what exchange rate to offer? Well, the equation is very simple: everything is based on the liquidity that the pool has. The higher the offer or tokens available, the lower the rate.

Graph that explains the operation of exchange rates on Crypto.com. Source: Crypto.com

Due to the very nature of the market, exchange rates are self-regulating and balancing with the external rates of a pair to be exchanged. This is due to arbitrage, which, in short, is to take advantage of the difference between exchange rates of two different platforms to generate profits, changing 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 once you have chosen the pair of tokens to exchange.

Likewise, to offer more adequate rates between the different exchange pairs, Within the Crypto.com protocol you will have a “Route” to try to obtain the best rate. What is this route about? Well, if for example you want to exchange WBTC for CRO, but the pool of this pair is with very little offer, you will find a very high exchange rate. To fix it, Crypto.com’s DeFi Swap will look for a route between the different pairs, to get the most favorable exchange rate. Remaining, for example, exchange WBTC for ETH and then from ETH to CRO. Finally having your CROs in your portfolio, being the exchange for ETH a mere procedure to obtain a better rate.

What is needed to use Crypto.com exchanges

For the purposes of this tutorial we will use the MetaMask wallet, which is also compatible with Crypto.com. However, you can also use any wallet that is compatible with WalletConnect.

Regarding the use of the platform, there are a number of countries in which Crypto.com is restricted due to local laws, among which you can find: Bolivia, Cuba, Ecuador, Venezuela and the United States. You can see the full list of unavailable countries here.

How to trade on Crypto.com

The first step is to open the interface for decentralized exchanges of Crypto.com, which you can access from the following link.

Crypto.com DeFi Swap main cover. Source: Crypto.com

Upon entering Crypto.com DeFi Swap you will find yourself directly with the exchange screen. However, first of all, you will need to connect your wallet. For this, you will need to locate the option Connect to wallet (Connect wallet). There you will choose between MetaMask or WalletConnect. You connect or log into your wallet, as you would with any other dApp and voila.

Choose tokens to exchange

With the wallet connected, the next step is to choose which cryptocurrencies you want to trade.

Crypto.com DeFi Swap Exchange Form. Source: Crypto.com

In the From box you will need to display the list of available tokens from the Select a token option to choose the one you want to exchange. Later, you must enter the amount you want to exchange.

In the To box, you must replicate the procedure, but this time only choosing the token you want to receive; automatically, the amount you will receive will be refilled according to the exchange rate of the pair to be exchanged. Keep in mind that the total amount to receive shown is approximate.

With everything ready, at the bottom you will be shown the following information:
Page Break

Minimum received: In the event that the exchange rate drops dramatically just at the time you make the exchange and before the transaction receives a confirmation on the network, this will be the minimum amount allowed that you can receive. Otherwise, the transaction will be reversed and you will need to execute another exchange order at the new exchange rate.Price Impact: is the percentage spread between the change within Crypto.com and the external market.Liquidity Provider Fee: total amount to be paid for the exchange commission, remembering that the commission is 0.3%.Route: Denotes the route or number of exchanges.

To finish, all you have to do is press Swap, which will open a small box to verify that all the information is correct. Subsequently, a window of the wallet that you have connected will open for you to confirm the transaction. Once this is done, you only have to wait for the network confirmations to see the available funds.

Earning interest with DeFi Swap from Crypto.com

As we mentioned at the beginning, a fundamental part of the operation of Crypto.com’s DeFi Swap are the liquidity pools. There, you can deposit and earn interest with your cryptocurrencies.

The way you generate profits is through the collection of commissions. How does this work? For each exchange a fixed rate of 0.3%, that goes to the pool in general and is distributed among all liquidity providers according to their contribution to the pool. For example: if a pool has 100 ETH in total, and you have deposited 10 ETH, it means that your contribution is 10% of the total pool. This means that 10% of each commission paid will correspond to you.

Form to be a Crypto.com DeFi Swap liquidity provider. Source: Crypto.com

Now, to start being a liquidity provider, you must locate the Pool option within DeFi Swap and select Add Liquidity (Add Liquidity).

Within the form that will open you will need to select the pair of tokens to which you want to provide liquidity.

Something interesting that happens when depositing is that the amount is transferred according to the current market exchange rate. That is, if you want to deposit 8.7 ETH, like the example in the image, you must contribute the equivalent of 8.7 ETH in CRO at the current rate. The reason for depositing 2 tokens at the same time is quite simple and practical: no matter how much you deposit, the exchange rate will not be affected by sudden excess liquidity in a single token. Since, if you were to deposit a single token, you could modify the exchange rate.

This is reflected at the time of deposit, since when choosing the pair of tokens and placing the amount to be transferred in one of the two, the other will be filled automatically.

At the bottom you will see the exchange rate from token A to token B and vice versa. You will also have the Share of Pool (Participation in the pool), or what is the same, how much your deposit occupies within the pool.

With everything ready, click on Supply (Supply) which will open a confirmation box, where later it will be necessary to confirm the transaction from the wallet.

Remember that you can withdraw your tokens at any time you want.

Earn more interest on your deposits with the Crypto.com DeFi Swap Boost

Crypto.com DeFi Swap offers you the opportunity to Stake (Deposit) CRO for periods of time from 1 to 4 years. This allows you to generate more CRO, as well as increase your earnings on your deposits to liquidity pools.

Crypto.com DeFi Swap Staking CRO Form. Source: Crypto.com

The minimum deposit amount is 1000 CRO, and in this case, you will not be able to withdraw them until the term you have set is up. However, you will not be able to withdraw the deposited CROs until the term you established at the beginning has expired.

Of course, this Boost tool cannot be used without first having funds deposited in the liquidity pools. This is because, depending on the amount of CRO deposited and the years chosen, 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 on Stake and earn now.

Here you must select the amount to deposit and the period (Stake Period) for which your CROs will be deposited.

With everything ready, now you will need to check on Review Stake that will show you a small confirmation box. The next steps are: mark Approve CRO (Approve CRO), option that you must confirm from your wallet, and finally Confirm Stake (Confirm deposit) to finally finish the process.

How Much You Can Earn Staking CRO on Crypto.com DeFi Swap

The multiplier earned generated from your CRO stakes within Crypto.com’s DeFi Swap are calculated based on the amount of CRO deposited and the years in which they will “stagnate.”

In the previous image you can see a table that shows the equivalent of the multiplier that you will get according to the amount you deposit. Remember that this must be applied to the value of the Share of pool (Shared with the pool) that you will see when making deposits in the liquidity pools.

However, if you don’t want to complicate your life with manual processes, accounts with the APY option within the Crypto.com DeFi Swap exchange box. This offers you a calculator with which you can estimate the most approximate value that you will generate with your deposits and stakes within the platform.

To calculate the total winnings, you only have to indicate the value in USD of all the funds that you have deposited together with the total amount in CRO and the years for which they will be in “Stake”. Source: Crypto.com

Conclusions

Quick, easy exchanges and that you can also earn interest on your money: that’s what DeFi Swap from Crypto.com allows. And if you have used Uniswap before, the adaptation process will be much easier for you.

The interesting thing here is being able to generate more tokens, without doing anything. It’s basically like a savings account: you deposit and then wait for your money to earn interest. This is all you need to do within Crypto.com. Of course, be careful with the amount you are going to deposit.

In conclusion, DeFi Swap is still in full growth, its White Paper was only launched in September 2020 and there are still functions to be shown, such as the Additional Yield (Bonus Yield), which appears within its White Paper but not to date. has been implemented.

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 extra bonuses, which you may not find available on other platforms.

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