What are Swaps?

A swap is a financial transaction in which two parties exchange financial instruments or cash flows. In cryptocurrency, trade refers to exchanging one cryptocurrency for another, often facilitated by a decentralised exchange (DEX).

On a DEX, users can create orders to buy or sell a specific asset at a price. These orders are added to the order book, a public record of all open orders. When another user sees an order they'd like to fill, they can execute a trade with the corresponding order. This allows users to trade directly with each other rather than going through a centralised exchange.

Swaps can be conducted using various financial instruments, including cryptocurrencies, tokens, and other digital assets. They can be used for multiple purposes, including speculating on price movements, diversifying a portfolio, or simply exchanging one asset for another that the user prefers.

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