Steemit Crypto Academy Contest / S13W1 - Token Swap
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INTRODUCTION |
Blockchain technology keeps evolving and changing the way we think about transactions, decentralization, and digital assets. One such change in thinking is the concept of token swaps.
This week, we'll be looking into token swap, its importance in blockchain ecosystems, and its impact on users.
Use your own words to define what a token swap is, and interpret the fate of this group of tokens when the final tokens are created. |
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Before we go into the full meaning of what token swap is all about, I would like us to look at the literal meaning of the words that make it up, "Token" and "Swap".
A TOKEN in this context is said to be a digital asset that represents value or utility on a blockchain. They are created and issued on different blockchain platforms, to serve diverse purposes.
Tokens can be exchanged, stored in digital wallets, or used to access decentralized applications (DApps) of a blockchain ecosystem. Therefore, making them an important aspect of the cryptocurrency ecosystem.
SWAP on the other hand refers to the act of exchanging or trading one thing for another. Like trading objects, possessions, or even ideas for something else.
An example will be the trade-by-barter system, where one trades what he has for what he wants/needs. Like I have yams but need yeans, and a friend of mine has beans but needs yam. I give him yam while he gives me beans, we've swapped items in beans and yam.
Therefore, TOKEN SWAP refers to the process of exchanging one type of token or cryptocurrency for another. It can involve swapping tokens within the same blockchain or transferring tokens from one blockchain to another.
The swap process typically involves sending the original or old tokens to a specified address and then receiving the new tokens in return.
To participate in a token swap, users usually need to follow a specific process, such as creating a new account on the new blockchain, and then transferring the old tokens to an assigned address, then an equal amount of the new tokens will be transferred to the user's new account on the new blockchain, on confirmation of the transfer of the old token based on a predetermined ratio.
The fate of the original or old tokens once a token swap is completed in a blockchain, depends on the specific token swap mechanism used.
In some cases, the original or old tokens become outdated and lose their value, as the newly created tokens take their place. An Example of such cases include;
The token swap of the TRON (TRX) token from the ERC-20 version to the native TRX token on the TRON blockchain. When the token swap was completed, the old ERC-20 TRX tokens became obsolete, lost value and were no longer used.
But then, there are other cases where a token swap was completed, and the original or old token co-existed with the new token. This occurs in cases where the token swap was carried out as an upgrade or migration to a new protocol.
In such cases, the old token stays actively in use on the original blockchain while the new token is used on the upgraded blockchain allowing for a smooth transition and providing compatibility with existing systems and applications depending on the old token. While also providing flexibility for users who prefer to continue using the old token. Examples of such cases include;
The token swap from the ERC-20 version of the Binance Coin (BNB) to the BEP-2 version on the Binance blockchain, where even after the process has been completed successfully, the ERC-20 BNB tokens are still actively in use on the Ethereum blockchain.
Another good example is the swapping of the EOS token from the ERC-20 version to its native EOS token on the EOSIO blockchain. After the completion of the swap process, the old ERC-20 EOS tokens remain in use alongside the native EOS tokens.
Explain why do blockchains perform a swap? and is this operation essential during its launches? |
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Blockchain projects undergo token swaps for various reasons, with the most common reason for a token swap being
Upgrading or migrating to a new blockchain network: A cryptocurrency project may decide to migrate to a new blockchain, therefore, requiring users to swap their old tokens for new ones on the new blockchain.
• Rebranding or Tokenomics:
A project might carry out a token swap as part of a rebranding or change in its tokenomics. For instance, if a project decides to change its name or ticker symbol, it might require a token swap to reflect these changes.
• Hard forks:
A blockchain project might undergo a hard fork (i.e. a fundamental change in a blockchain protocol) resulting in a permanent separation from the previous version, hence, creating two separate blockchains. Hence, bringing about the distribution of a new token. Hence, users or holders of the old token may be required to swap their old tokens for the new ones.
Other reasons to undergo token swaps include to improve security, enhance scalability, or align with new regulatory requirements.
A user can also swap his or her tokens for other tokens of another blockchain of choice using external exchange/swap platforms for safekeeping or investment purposes. Exchange platform that allows token-swapping includes Dappradar, Uniswap, Pancakeswap, Sushiswap, Changelly etc.
The process of token swap is usually an important part of a blockchain project's launch because it represents a vital transition in the project's development.
The process of token swap is essential to a blockchain during blockchain launches as it ensures the smooth upgrade and maintenance of network compatibility. Serving also as an outlet for transferring tokens from the old blockchain to the new one, ensuring continuity and preserving the value of existing tokens.
Thus, token swap is an important process that helps to sustain the integrity and functionality of a blockchain network.
Show how such blockchain which performed token swap? take an existing example. |
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There have been several tokens that have undergone token swaps.
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One recent example of a token swap is the migration of the ERC-20 tokens of the project XYZ to their native chain. XYZ announced the swap on their official website, providing instructions for users to participate.
Users were asked to send their ERC-20 tokens to a specific address, and in return, receive an equal amount of XYZ's native tokens on the new blockchain.
Other examples of cryptocurrency projects that have undergone token swaps and how they achieved it:
• EOS:
EOS conducted a token swap from ERC-20 tokens to their native EOS tokens by setting up a registration process where users could map their ERC-20 tokens to the new EOS blockchain.
• Tron (TRX):
Tron also migrated from ERC-20 tokens to their mainnet. They facilitated the token swap through various exchanges and wallet providers that supported the migration process.
• VeChain (VET):
VeChain conducted a token swap from the ERC-20 VEN tokens to the native VET tokens. They provided a token swap portal where users could exchange their ERC-20 tokens for new ones.
• ICON (ICX):
ICON performed a token swap from ERC-20 ICX tokens to their native mainnet ICX tokens. They provided a token swap process through their official wallet and supported exchanges.
• Ontology (ONT):
Ontology migrated from NEP-5 tokens to their mainnet ONT tokens. They conducted a token swap by implementing a mapping process where users could convert their NEP-5 tokens to the mainnet ONT tokens.
Has Steem Blockchain already performed token swap? If so, tell us how. If not, do you think it would have been better that used it? |
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Oh yes! The Steem Blockchain has already performed a token swap. Steem blockchain achieved this by transitioning from the original Steem tokens (STEEM) to a new token called Hive (HIVE).
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The token swap occurred due to a community-led fork in which a portion of the Steem community created the Hive blockchain. Users were able to exchange their STEEM tokens for HIVE tokens through a specific process implemented by the Hive community.
The Hive community implemented a specific process where users had to create a new Hive account and then initiate the token swap by transferring their Steem tokens to the designated Hive account.
Once the transfer was confirmed, the equivalent amount of Hive tokens was credited to the user's new Hive account. This process allowed Steem holders to swap their Steem tokens in a 1:1 ratio to Hive tokens in the new Hive blockchain.
Are there any risks when using it? |
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Like any financial transaction, token swaps come with certain risks. Some potential risks associated with token swaps include:
• Technical Issues:
There may be technical challenges during the swap process, such as network congestion or smart contract vulnerabilities, which could result in lost or delayed tokens.
• Fraud and Phishing:
Users with malicious purposes can take advantage of a token swap process by creating fake addresses and impersonating authorized channels to con users into sending their tokens to the wrong addresses, resulting in users losing their assets and tokens.
• Loss of Value:
The process of token swap can bring about changes in a token value either before, during, or after the token swap process. It can also lead to the outdating of the old tokens which can cause financial losses for users.
• Lack of Support:
This occurs when exchange platforms or wallets do not support a token swap process, in turn, making it difficult for users to swap their old tokens for new ones or gain access to the new tokens.
CONCLUSION |
In conclusion, Token swap plays a significant role in blockchain ecosystems, such as allowing users to trade their old tokens for new ones. Giving users access to new tokens. Brings about easy transitions and opportunities, however, users need to take into reference the risks and right procedures to ensure a smooth swap for users.
I wish to invite @anasuleidy, @ninapenda, @ruthjoe, @drhira and @suboohi
Thank You for your Time
NOTE: Always have a smile on your face, as you are never fully dressed without one.
Thank you @sahmie for an informative and well -structured post on token swaps. Your explanation starting from the very basics is easy to follow and makes this complex topic accessible to All readers . The Examples especially the Steem to Hive transition provide real-world context illustrating the practical implications of token swaps.
I appreciate the inclusion of potential risks associated with token swaps reminding us all to be vigilant & cautious when Participating in such operations. Your post is a valuable resource for anyone Looking to understand the dynamics & importance of Token swaps in the world of blockchain.
Well done and thank you for sharing your knowledge with the community! 🚀🔗💡
Wow! This means a lot to me coming from you as I do look upto you for inspiration and motivation. Thank you for sharing your thoughts on my entry
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thank you so much
Saludos amigo sahmie, excelente participación, los tokens pueden ser intercambiados o transformados a otros tokens mediante diferentes plataformas o billeteras, como.indicas todo va a depender de la razón y de la necesidad del intercambio.
Suerte.
True, several reasons plays a role to why users will want to exchange or swap their tokens for another. Thank you for your kind words and I'm expecting to see your entry soon.
I really like how you explain it, and see that your knowledge about crypto is very extensive. Good luck
Thank you for your kind words mate. Hoping for the best brother.
Thank you, friend!
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Friend, you have made a very interesting publication, as well as very easy to understand.
Thanks for the invitation and success in the challenge.
Thank you for your time spent in going through my post, I really appreciate your time and effort.
Hello brother.
You have explained every topic in your own words and It is easy to understand every topic as You have told in simple words which will be easier for any newbie to understand about token swapping.
I like the way you have given example about every topic and I really like the images which you have edited on PixelLab as these images are related to that certain topic and It makes it easier to understand about it.
I enjoyed reading your post.
Good Luck for the contest.
I would like to express my gratitude to @sahmie for the exceptional post on token swaps. Your explanation, starting from the fundamental concepts, is not only informative but also incredibly well-structured. You've managed to demystify this intricate topic, making it accessible to all readers. Well done!
So, imagine for a moment that you're bringing two essential pieces together: "token" and "swap." When you combine these, you get the fascinating concept of a "token swap." It's like a digital dance where you exchange one type of token or cryptocurrency for another. This dance can happen within the same blockchain, like a waltz with your old tokens, or it can be a grand migration, moving from one blockchain to another, like a ballroom shift.
Well done brother 👏. You have explained very well in this topic.Have shared your relevant information about different types of token swaps like tron , icon etc.
Thank you for your time and supportive words.
Thanks a lot brother for sharing a lot of informative content with all of us and I am happy to see your post which is the complete guide for a beginner that want to understand this topic from very start and from a very basic step this post is a complete guide for them.
You have explained very well the meaning of token that what is this as well as you have also explain the meaning of swap that when we talk about the word swap then which thing should be click in our mind so it is very important to understand all these basic things I wish you good luck and success in this engagement challenge and I want to see same efforts from you in your future.
Thank you for your supportive words, we look forward to the upcoming week.
Your welcome and I am hopeful that this week would be very enjoyable just like first week good luck to you
I will try my best to make it as enjoyable as I can. Thank you
Welcome 🤗