Swapping on a DEX
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 7 min
In short
A DEX lets you exchange tokens by connecting a wallet, with no account to open. The flip side is that nothing is vetted — scam tokens sit on the same screen as real ones — and a mistake cannot be undone. Fix a routine for yourself: identify the token by contract address, then check slippage and the fee breakdown, before you swap.
Key points
- DEXes swap through liquidity pools rather than an order book, so larger trades get worse prices
- Nothing is vetted, so fake tokens share the same name — identify by contract address
- A first-time token needs an approval transaction, charged separately from the swap
- Setting slippage tolerance too wide can let a trade fill far worse than you expected
Definition
Exchanging one token for another on a decentralised exchange with your own wallet connected. The dominant design is the automated market maker, which uses liquidity pools instead of an order book.
Start from what a DEX is not: there is no operator brokering your trade. Price comes from the ratio of two tokens sitting in a liquidity pool, and you put one in to take the other out. Uniswap is widely used on EVM chains and Jupiter on Solana, but neither has identity checks or accounts — whoever holds the wallet is the only person who can act.
The flow runs roughly as follows. First, keep some of the chain's native asset on hand for gas (ETH on Ethereum, SOL on Solana); without it you cannot submit anything at all. Then go to the DEX, having verified the official domain yourself, and connect your wallet. Arriving at a look-alike site through a search advert is the single most common way people lose money here.
Choosing the token is the hard part. Names and symbols are free for anyone to use, so what comes up in a search is not necessarily genuine. Take the contract address from the project's own site or official account and select the token by that address. 'How to verify a token contract' sets out how to judge this.
Enter an amount and the interface shows the expected output, the price impact, the route and a fee breakdown. The setting to look at is slippage tolerance — how far from the quote you will still accept execution. Too tight and the trade fails; too loose and it can fill at a badly unfavourable price. Widening it on a thinly traded token makes you a target for traders who front-run the difference. Leaving the default alone is usually right.
For a token you have not used before, an approval transaction precedes the swap: it grants the contract permission to move that token. You may be offered an unlimited amount; if you can cap it at what you need, do. Approvals persist until explicitly revoked, so clean them up afterwards using the steps in 'Revoking token approvals'. Once executed, you can verify the result in a block explorer.
Watch out for
- · Nothing on a DEX is vetted, and tokens deliberately built so that selling is refused genuinely exist. Being able to buy proves nothing
- · Trades cannot be reversed and there is no one to claim a refund from. Picking the wrong token has no remedy
- · Verify the official domain yourself. Avoid search adverts and social links; use a bookmark
Frequently asked questions
What does a DEX charge?
The usual structure is a pool trading fee, possibly a service fee, plus the chain's gas cost — but rates and terms change, so no figures are given here. The breakdown is shown on the confirmation screen before you execute; read it there.
Should I use an exchange or a DEX?
It depends on the purpose. A Japanese exchange has identity checks, lets you buy with yen, and has a support desk if something goes wrong. A DEX needs no account and reaches far more tokens, but nothing is vetted, there is no desk, and every judgement is yours. Neither is simply superior.