Token Trading on Quickswap
Photo by Vlada Karpovich from Pexels

Token Trading on Quickswap

By RockHoward | Rock's DeFi Playbook | 5 May 2021


Quickswap is the leading distributed exchange (DEX) on the Matic Network. I have used this Uniswap clone almost every day since I moved some tokens to the Matic Network in early March. I have seen this DEX grow to the point where it now often surpasses Uniswap on a transactions per day basis. Besides trading I have also provided liquidity to quickswap at times and thereby earned rewards which are in the form of the platforms' QUICK token. I will save the discussion of providing liquidity for Quickswap for a future article. In the meantime there are better ways to learn about providing liquidity than by jumping straight into it like I did. Look for an article from me about that in the very near future.

Quickswap on Matic provides some interesting opportunities for traders. If you are already familiar with Quickswap or Uniswap then you might want to jump ahead to the trading tips at the end of the article.

Getting Started

You bring up Quickswap by visiting https://quickswap.exchange using a browser where you also have Metamask installed or you have some other similar web wallet available. The first thing to check is that the program is connected to your wallet. If so then your wallet address is displayed in the upper right hand corner. If your wallet is connected to some other network, then you will see "Switch to Matic" instead.

Once connected you will see the amount of QUICK and MATIC besides your wallet address. Always strive to keep at least 1 MATIC in your wallet and then you can be sure that you have enough "gas" to pay for several thousand transactions. Don't worry about the QUICK amount. Owning QUICK does not confer any advantage in terms of using the quickswap dapp.

The "Gear" icon in the upper right hand corner is for settings. Open that and you will see the "slippage" setting (which I will discuss shortly) and "expert mode" which you should ignore. I am a very experienced trader on Quickswap but I have never seen the need to use the expert mode. Perhaps in highly volatile markets it might slightly increase the chance of completing a trade, but I have never seen the need to use it. Finally the "Toggle Dark Mode" option is good to know about. The default display for quickswap is pretty bright and can be taxing on your eyes.

The Menu Options

We are going to ignore Pool and Rewards for this article. The Charts menu takes you to a new tab that displays info about the quickswap exchange. (Be patient. It can take a while for this data to load at times.) While the "Overview" screen is interesting, it is the "Tokens" and "Pairs" that are the most useful as they give you a clear picture about which tokens and trading pairs have the most liquidity and trading volume. These are the trades that will generate tighter ranges meaning that you get a better price when trading.

Finally back on the main quickswap The "Buy" menu brings up a window provided by Transak where you can directly purchase crypto from fiat. I have never used this option and so I cannot advise you on it.

The Token List

The default Swap screen will be our home for the rest of this article. You set up a swap by choosing a "From" token and a "To" token by using the pulldown menus. Quickswap may not show the token that you are interested in. In that case use the "Search" field to try and locate the token by name. If that doesn't work then you can enter the ERC-20 contract address instead. Be very careful when adding new coins. There are plenty of bogus coins defined on the Matic blockchain and it is up to you to be sure that the tokens that you are trading are legitimate.

You will see wrapped tokens like WBTC, WMATIC, and many others on the token list. One that you would expect to see but won't is WETH (wrapped ethereum). For some reason the main quickswap page calls wrapped ethereum "ETH" and there is no unwrapped ethereum on Matic. (The dapp will refer to the same coin as WETH in other parts of the dapp and in their charts. Most other dapps call it WETH as well.)

When you specify a swap between a wrapped token and an unwrapped token of the same type (e.g., MATIC and WMATIC), then the button will change from "Swap" to either "Wrap" or "Unwrap" depending on how you set things up. There is no concern about price when wrapping or unwrapping but the window still needs to know how many to wrap/unwrap. The wrap and unwrap transactions are very cheap and very fast.

The first time you request an action such as "swap", "wrap" or "unwrap" for a given type of token Quickswap will but up an "Approve" button.
You need to run this one time transaction to allow Quickswap to perform transactions that involve that type of token.

Trading

Now we get to the heart of the matter. Type in the number of token to trade in either the "From" or the "To" fields or else use the "MAX" button to trade all of the tokens of the type in the "From" Field. (Be very careful to never trade away all of your MATIC as you need that in your wallet in order to perform transactions! Quickswap will not prevent you from doing this!)

Once you enter a number in either field, the dapp calculates the number for the other field and marks it as "(estimated)". You never get exactly what you ask for with Quickswap, but you generally get pretty close and always more than the amount shown in the "Minimum received" field. When you are ready, hit "Swap" to begin the trade. If the price has changed too much before you can execute your trade, then a special window comes up announcing that the price has changed and asking whether or not you accept the updated price. Close this window if you decide to back out of the trade. If all goes well then the next thing you will see is a popup from your wallet asking you to confirm the transaction. After you confirm the transaction it goes into the "Pending" state. Usually after a few seconds the transaction is finished and the token amounts will be updated both in the Quickswap display and in your wallet.

Challenges and Opportunities

Some token prices are highly volatile. In this case you may have to increase the allowable slippage in your settings in order to get a trade through. I have gone as high at 2% at times, but even higher percentages may be necessary in some cases. It just depends on how motivated you are to make the trade right away.

Also keep an eye on the fees paid to the liquidity provider. While transaction fees on Matic are always to small to worry about, sometimes the liquidity fees combined with the slippage can make a trade pretty unattractive. Look that over carefully before you start to trade a new token and consider if trading this token is likely to be a profitable endeavor. (Of course this is for short term trading. If your focus is on the long term then these considerations might not be important. Still, a penny saved is a penny earned and sometimes these fees are a lot more than just a few pennies.

Sometimes Metamask underestimates the gas required for a trade and the transaction fails. This happens even more often on other dapps and/or when the network is busy. Sometimes the error messages are clear and other times they are obscure like "Internal transaction failed." It is often possible to solve these problems by raising your gas limit. Here is how you do that. Open Metamask and select the icon that represents your current account. Select "Settings". Select the "Advanced" page and then set "Advanced gas options" to "ON".

After you do this your metamask confirmation windows will include a gas fee field a gas limit field. So far on Matic I have never had to adjust the gas fee and so don't do that. Instead simply raise the gas limit by at least 10%. Whatever is quick and easy to do is generally fine. Changing something like 26000 to 36000 is a typical thing to do. Doing this will often cure your transaction problem right away.

More Trading Tips

Sometimes the best thing that you can do is to set up a trade and then wait. You can watch the ratio of the tokens update over time and wait for the price that you want. Note that you can switch the displayed ratio in either direction at any time to make this as easy as possible. If you are watching a potential trade in this manner and the relative price seems to be going against you, don't panic. If someone comes along and makes a big trade it can jump the token prices in either direction if only for a few seconds. I have occasionally turned an unprofitable exit from a position into a profitable one just by being attentive and ready to strike when the price momentarily moved in my favor.

Immediately after making a trade you sometimes want to reverse the "To" and "From" tokens right away in order to be prepared to unwind the trade if it starts to go against you. The quick way to do this is to select the tiny down arrow symbol that you can see between the "From" field and the "To" field.

One edge you can get is to watch the action on a different exchange where there is a lot more liquidity even if the trading is taking place on a completely different network. Sometimes the prices on quickswap lag a bit behind the price moves elsewhere. While there is no guarantee that discounts or premiums on token prices on quickswap as compared with other exchanges will or will not persist, sometimes you can spot in inequity, make a trade and then just wait for the discount or premium to melt away giving you a nice profit. More likely you can spot a breakout or trend reversal on some other market and use that information to inform your trades on quickswap to good effect. Careful study of the market pairs that you care about might suggest some repeatable trading strategies that can directly improve your bottom line.

Coming up in a yet to be determined order will be articles on Aave, mStable, APY.vision (which has the best learning tool and monitoring tool for those who want to be successful at providing liquidity) and a look at the actual process of providing liquidity and collecting rewards on Quickswap.

Image Credit: Vlada Karpovich on  Pexels


RockHoward
RockHoward

I am a software developer and crypto enthusiast (among other things) that primarily hangs out on the Matic (aka Polygon) Network. I also run a discord for programmers who want to study functional programming concepts for crpytocurrency programming.


Rock's DeFi Playbook
Rock's DeFi Playbook

Learn the specific steps needed to perform the most common DeFi operations. Starting with Metamask and then moving on to a variety of dapps on the Polygon (aka Matic) Network, you will learn how to perform staking, providing liquidity, leveraged trading, yield farming and buying and selling options. You will need to do your own research on your best course of action as nothing in this blog is financial advice.

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