How does Binance Liquid Swap work
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With Binance Liquid Swap it is possible to trade tokens from pools instantly and earn rewards.
In fact, Binance Liquid Swap has low commissions with reduced spreads and allows users to easily add tokens to the pool to become a market maker and earn interest and a share of the transaction fees for pooling.
Swaps are especially useful for stablecoins, partly because prices are more stable and fees are lower, especially for large transactions.
Binance Liquid Swap is based on a liquidity pool: in each pool, there are two tokens, and the relative quantity of these two tokens determines the price. Exchanges can take place as long as there are tokens in the pool.
Although it might sound complicated, it is actually quite simple, as everything is done by Binance: users only have to provide liquidity or exchange their tokens in the token pools.
In addition, when providing liquidity, Binance pays interest and a share of the commissions on the transactions that take place in the pool.
Guide to Binance Liquid Swap
Within the Binance Liquid Swap page, there are two tabs, “Add” and “Remove”.
The “Add” tab allows to easily and quickly add liquidity by choosing which token to deposit, and on which pool to deposit it.
By contrast, the “Remove” tab allows users to withdraw tokens from pools by choosing one of the pools they previously deposited tokens into and the token they wish to withdraw.
Providing liquidity to the pool can generate income, as the staked tokens receive a portion of the commissions from transactions in the pool, and the user is credited with flexible savings interest. However, when the price of a token fluctuates greatly, the holders of shares in the pool may not achieve the expected profit, so staking carries a risk and there is no guarantee of the capital invested.
Instead, on the swap page, all that is required is to deposit the tokens to be exchanged, and select the ones to be received.
Binance Liquid Swap is an easy product to use as a gateway to start understanding how decentralized finance (DeFi) works.
The post How does Binance Liquid Swap work appeared first on The Cryptonomist.
