What is swap tokens?

A token swap refers to the exchange of one crypto token for another without the need to first convert it to fiat currency. For example, when you deposit Ethereum’s native token ETH on a DEX and get USDT in return, you are conducting a token swap. 

But there’s more. 

Token swapping has three distinct meanings in the crypto space. Let’s explore each one of them separately.

Regular token swaps

Regular token swaps simply refer to the exchange of tokens through a centralized or decentralized exchange. 

The concept of token swapping through both exchanges is the same — you sell a token you already own and buy an equivalent value of the other token. However, the amount of control you have over your assets differs in both exchanges. 

Centralized exchanges are custodial, meaning they have ultimate control over your assets. Decentralized exchanges, on the other hand, offer users complete control over their assets, which they store using a non-custodial wallet.

Cross-chain token swaps

A cross-chain token swap is when you move your tokens from one blockchain network to another. This is usually done using bridges that lock tokens on one blockchain and mint a wrapped token on the other. 

For example, you can use the Binance bridge to lock your ETH on the Ethereum network and receive wrapped Ethereum (wETH) on the Binance chain. And you can follow a similar process to unwrap your wETH and receive ETH in your Ethereum wallet.