Swap

A swap is the direct exchange of one cryptocurrency for another in a single transaction, most commonly executed against a liquidity pool on a decentralized exchange. Unlike a traditional trade that matches your order with another person's, a swap on an automated market maker trades against pooled reserves at a price set by the pool's formula, settling immediately on-chain.

A concrete example: a user opens Uniswap, selects USDC as the input and ETH as the output, and enters 1,000 USDC. The interface quotes how much ETH they will receive based on current pool reserves, minus the pool fee. The user approves the transaction in their wallet, and seconds later the USDC has left their wallet and the ETH has arrived — no account, no order book, no waiting for a counterparty.

Two practical details matter. First, slippage: the executed price can differ from the quoted price if other trades land first, so interfaces let you set a slippage tolerance that cancels the swap if the price moves too far. Second, token approvals: swapping an ERC-20 token requires first granting the exchange contract permission to move it, a separate transaction that has its own security implications. A common misconception is that a swap quote is a locked-in price — it is an estimate, and the final rate is only determined when your transaction executes on-chain.