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Are There Any Risks When Swapping?
Are There Any Risks When Swapping?
Updated over a week ago

When swapping cryptocurrencies on Coinosh, there are certain risks to be aware of:

  1. Cost of Swap Transaction: Swapping on a decentralized exchange (DEX) involves transaction fees paid to the network miners and swap fees paid to the DEX. Transaction fees vary based on network conditions, and swap fees are typically a percentage of the transaction amount. High network congestion on blockchains like Ethereum can result in higher transaction fees.

  2. Transaction Deadline: Swap transactions have a validity period, typically around 20 minutes. It's important to submit the transaction with a sufficient fee to ensure it is processed within the deadline. A low fee may cause the transaction to remain pending beyond the deadline, resulting in a failed swap.

  3. Price Slippage: Price slippage refers to the difference in token price between the time a swap order is placed and when it is executed on the blockchain. It occurs due to changing market conditions during transaction processing. Coinosh displays estimated slippage, and users can set a slippage tolerance indicating acceptable price variation.

  4. Price Slippage Tolerance: Setting a slippage tolerance determines the maximum price variation acceptable for a trade. It is expressed as a percentage of the swap value. Choosing a too low or too high slippage tolerance may impact the execution of the trade.

  5. Swap Transaction Fees: Swap transactions, especially on Ethereum, can be costly due to network fees. It's important to consider the transaction fees in relation to the swap amount to ensure it is economically viable.

  6. Approval Transactions: When selling ERC20 or BEP20 tokens, an approval transaction is required. This transaction grants permission to the DEX to deduct tokens from your balance during the trade. The DEX cannot use your tokens without this approval.

It's important to review these risks and consider factors such as transaction costs, network conditions, and market fluctuations before executing swap transactions on Coinosh.

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