🔁Swap

Swap

Swaps are a fundamental aspect of interacting with a Decentralized Exchange (DEX) like Astro Swap. The basic concept of a swap is straightforward: it involves exchanging owned tokens for an equivalent value of different tokens. During this exchange, a nominal swap fee is deducted, serving as a reward for liquidity providers who contribute to the pool.

Swap

The swap mechanism in Astro Swap, as with many DEX platforms, diverges from traditional order book markets. In an order book system, trades are executed based on a first-in-first-out principle, making the timing of an order crucial. In contrast, Astro Swap executes swaps against a passive liquidity pool, with liquidity providers earning fees in proportion to the amount of active liquidity they contribute.

Price Impact

During a swap, the relative value of one token to another shifts dynamically, placing the final execution price between the initial and final prices. The impact is contingent on the available liquidity at the relevant price point. A swap will have a smaller price impact if there's greater liquidity depth at that price.

Price Impact

Slippage

In Astro Swap, users often encounter the term 'slippage' or 'price slippage.' This refers to the potential price change that might occur while a transaction is pending. To address this, Astro Swap utilizes the concept of slippage tolerance. Users can set their slippage tolerance to define the maximum price impact they are willing to accept. Should the final execution price fall outside this acceptable range, the transaction will fail, safeguarding the user’s interests.

Slippage

This approach ensures that trades in Astro Swap are executed efficiently, prioritizing the protection of users’ interests and providing liquidity providers with incentives through swap fees.