Swap and arbitrage

A step-by-step guide to swapping and arbitraging on the DEX

Swap using the DEX

Swapping tokens on the DeFiChain DEX (Decentralized Exchange) is easy. At the time of writing, the DEX offers swap for the following pairs:

  1. Ethereum–DeFiChain (ETH–DFI)
  2. Bitcoin–DeFiChain (BTC–DFI)
  3. Tether–DeFiChain (USDT–DFI)

The DeFiChain DEX does not suffer the high gas fees of Ethereum-based DEX, due to network congestion. Afterall, Ethereum being a general purpose blockchain, isn't specifically designed for decentralized finance. DeFiChain on the other hand, is born and made for DeFi, and DeFi only.

Step 1: Launch the DeFi Wallet desktop app

Don’t have the app installed yet? Click here for a step-by-step guide on how to do so.

Step 2: Make sure you have DFI in your wallet

After opening the DeFi Wallet desktop app, click Balances in the sidebar. Make sure you have funds (DFI) in wallet, as DFI is needed for transaction fees. If you don't yet have DFI, here is a step-by-step tutorial on how and where you can buy DFI.

Step 3: Navigate to the DEX (Decentralized Exchange)

Click on DEX in the sidebar to access the Decentralized Exchange.

Step 4: Perform a swap

The DEX provides a way for you to swap one coin for another. In this case, select DFI in the left From field.

Then select the coin you want to buy in right To field.

You can either specify how much you DFI wish to sell in the From field, or how much of the other coin you wish to buy, in the To field. You can also click the MAX button to enter the maximum amount of DFI.

Click CONTINUE when you are ready to swap.

Review the transaction amounts and fees. Then click SWAP to confirm.

Wanna be an Arbitrageur?

As liquidity gets swapped from a DEX (Decentralized Exchange), the ratio of the coins in any of the liquidity pool pairs becomes unbalanced. Because the price of tokens in a liquidity pool does not depend on market prices like in CEXs (centralized exchanges) based on the order book model, one of the coins in a pair can become cheaper or more expensive than the external prices in centralized exchanges. You can either buy low on DeFiChain and sell high on a CEX, or buy low from a CEX and sell high on DeFiChain). This is what we call arbitrage opportunities.

Here's an example:

Look for price differences between the DEX and CEXs. For example, at the time of writing, the BTC price of DFI at an exchange like Bittrex is 0.00002643 BTC per DFI. Compared to Bittrex, the price of BTC in the DEX is 0.00002522 BTC per DFI. BTC is more expensive at the DEX than Bittrex.

Swapping DFI for BTC

All we need to do is buy 1 BTC at Bittrex with 38,587.61607637 DFI.

Then sell the 1 BTC for 39,355.98845598 DFI on the DEX, for a profit of 768.37237961 DFI – about 2% for a single day. When the prices vary more, the arbitrage opportunities can get way higher.

Download the DeFi Wallet desktop app available for macOS, Windows and Linux, to use the DEX. You too, can be an arbitrageur.