05 Nov 2021 Jane Whitmoore
Token Swapping Made Easy With 123swap
Token swapping has become a major trend in the past year, especially when projects like EOS and TRON made it out of Ethereum’s shadow and started operating on their own blockchains. However, their start was primarily based on token swapping.
A token swap is the act of moving digital tokens from one blockchain to another. This process usually begins when a crypto-startup conducts а fund raising campaing, necessary to establish its private or public blockchain by using another blockchain.
EOS, for example, raised money using Ethereum’s blockchain, and the tokens were then transferred to the EOS mainnet when it went live.
However, token swapping may induce more problems than solutions due to its sophisticated nature. In order to reduce the technical difficulty about token swapping, 123Swap decided to develop its state-of-the-art platform, allowing you to swap, hold, send, receive, earn, invest into cryptocurrencies & NFTs in multiple chains using only the 123swap platform.
What do cryptocurrency token exchanges mean?
The terms "swaps" or "replacements" have a more significant technical meaning in the crypto realm than in traditional finance.
The way cryptocurrencies works makes it not feasible to switch from one cryptocurrency asset to another without introducing additional complications like more coding, further frameworks, or support structures development etc. Cryptocurrency assets are built on cryptography, and they live in an immutable blockchain, which differs from one crypto project to the other due to their digital nature.
A "token swap" or "coin swap" introduces new cryptocurrency units built on distinct technological structures or foundations. When this happens, one cryptocurrency asset is traded for another in the same ratio. The old one is discarded, and the new one is issued to token holders as an identically fungible substitute with the same market value.
Token swapping occured in the past in various ways.
Token swaps on EOS and Tron have already set the norm about token swapping in general.
Both EOS and Tron originated as Ethereum-based projects, and as a result, they both used the ERC20 token standard. Each network has its own set of tokens that investors and users may buy to get into the crypto sector. Users can also use either token on the network mentioned above.
Both EOS and Tron were able to migrate from Ethereum to their blockchains over time successfully. A "token swap" was instituted by both projects at this point, allowing token holders to exchange their ERC20 tokens for EOS or Tron (TRX) mainnet tokens.
Investors were able to utilise their newly minted "mainnet" tokens on each of their respective blockchain systems and keep the entire value of their ERC2O-based EOS and TRX coins, which makes token swapping a successful iniciative.
The rejected ERC20 tokens were 'burned' (destroyed) by EOS and Tron developers, leaving only each project's 'official' tokens in circulation, which ensures each mainnet’s integrity and value.
How are token swaps supported?
For the most part, token swaps are backed by a registration and auditing procedure or are conducted through a crypto exchange.
Token holders in the first scenario are often requested to register their tokens by the project's developers, who subsequently accredit such tokens via a compatible wallet. If investors choose the second option – swapping on a token exchange, the original tokens are usually burnt and replaced by official assets, held in the same wallet as the official assets themselves.
Token owners in the latter situation are invited to keep their money on a cryptocurrency exchange. Deprecated assets will be audited and accredited before being traded for fresher ones in return for token swaps that last for a fixed amount of time.
If a token holder does not take the appropriate steps to swap their digital assets, a token may be destroyed and become irreparable.
What are other applications there for token swaps?
Some blockchain initiatives may choose to "merge" or "fork" to attain new technologies and aims that complement their own. Forking is a preffered way to push out development updates, or correct issues with the token, blockchain, or fix security problems.
When developers exchange digital assets, they can create their own "swap rate." Suppose the total circulating quantity of a new cryptocurrency is large enough. In that case, developers don't have to exchange tokens in a 1:1 ratio and may afford to trade ten, one hundred, or one thousand units per asset.
Token swapping, especially when the decentralized finance sector really cemented itself as a indispensable part of the crypto ecosystem. Swapping ensures users are allowed to easily find a suitable project, or hedge against inflation in just a few simple clicks.
You can learn more on 123swap Finance website.Blockchain Cryptocurrency Crypto Market Blockchain Application crypto market monitoring token tokens cryptocurrency news