How to use Decentralized Exchanges?

Using DEXs may seem a bit tricky at first, but once you get the hang of it, it’ll become as familiar as your other TradFi transactions! Here’s a friendly guide to get you started:

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Step 1: Select a Decentralized Exchange (DEX) 

• First things first, choose which DEX that suits your needs. There are many different DEXs with different kinds of functions catering to specific preferences. 

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Step 2: Set Up a Cryptocurrency Wallet

• Once you decide which DEX to use, you need to set up a working cryptocurrency wallet. Think of it like your digital pocket. These are often browser wallets like Metamask or TrustWallet. Make sure this wallet is supported by your chosen DEX. 
• If you’re new to creating a cryptocurrency wallet, check out this guide: https://www.bitskwela.com/short-guides/how-to-create-a-metamask-wallet 

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Step 3: Fund your wallet

• Time to give your wallet some crypto love! Make sure that it has enough funds for swapping crypto and covering transaction fees.  
• How? The easiest way to fund a browser wallet is to buy some crypto from a centralized exchange and then send it to your wallet. 
• You can learn the ropes of sending crypto transactions here: https://www.bitskwela.com/short-guides/how-to-send-crypto-to-another-wallet 

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Step 4: Connect Your Wallet to the DEX

• With your funds in place, we can now interact with DEXs. Head to your chosen DEX’s website, then click the “Connect Wallet” button and select the wallet you wish to connect to DEX. 

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Step 5: Choose the DEX function you wish to use 

• Now that you’re connected, it’s time to pick what you want to do. DEXs usually have two main functions. You can either swap crypto for other crypto or you can provide liquidity to liquidity pools to gain interest. At this point, you can choose which feature you’d like to access and which one suits you best. There are varying steps for each function. 

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Swapping Crypto 

• Choose the crypto you wish to swap and the one you wish to swap for. 
• Enter the amount you wish to swap and receive, or hit the “Max” option if you’re feeling all in.
• Click the “Swap” button, review the transaction details, then click “Confirm Swap”.
• Some DEX transactions may need multiple confirmations. If there are required approvals, such as token spend allowances, confirm these in your wallet after reviewing them. 
• Once confirmed, your transaction will be pending on the blockchain. 
• You’ll see a pop-up saying your swap is a success once the transaction is completed. Easy-peasy!

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Fun fact, swapping in KTX.Finance comes with zero price impact and slippage, unlike other DeFi AMMs.

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Providing Liquidity to Liquidity Pools 

• In the context of DEXs, liquidity is essentially the “pool” of assets waiting to be traded. The more crypto a DEX has, the more liquid it is, which means more stability in prices.
• Providing liquidity to liquidity pools overall increases the capital efficiency of the DEX, which makes prices more stable. Liquidity providers are also generally rewarded with the yield on the crypto liquidity they provide, which comes from a share of the transaction fees generated. 
• To provide liquidity, head to the Liquidity Pool Section on the DEX you are using. This may be labeled as "Liquidity," "Pool,", “Earn,” or something similar. 
• Select the crypto pair you wish to provide liquidity for (e.g., BNB and USDT). Make sure you have an equal value of both cryptocurrencies to deposit in the pool. 
• Enter the amount of each crypto. The DEX automatically calculates the equivalent value of the other crypto needed based on the current exchange rate.
• You might need to approve token spend allowances. If a pop-up shows up, confirm and approve this action in your wallet. 
• Confirm the transaction to add your funds to the liquidity pool. Once the transaction is pending, wait for it to be confirmed on the blockchain.
• Voila! You’ll get your liquidity pool tokens. These represent a user's share in a liquidity pool and are kind of like your receipt for your contribution. You can use these later on to withdraw your share of liquidity. 

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Did you know that KTX.Finance's Liquidity Pool (KLP) is a multi-asset liquidity pool? Why does that matter? Well, here’s the scoop: 

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Because it is multi-asset, liquidity providers who deposit their funds into KLP will not suffer impermanent loss, unlike with other AMMs. 

Piece of cake, right? Just keep practicing and you’ll get the hang of DEXs in no time!

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Lastly, let’s just go over some precautions and safety tips so we can use DEXs to their full potential!