TL;DR
QuickSwap is an Automated Market Marker on the Polygon Network. It’s a copy of Uniswap and offers the same liquidity pool model. Users add pairs of tokens to liquidity pools and earn transaction fees from others who swap their tokens using the pools.
QuickSwap has seen popularity due to the speed and low fees offered by the Polygon Network. It’s also compatible with the Ethereum blockchain, allowing you to swap ERC-20 tokens. There is, however, always the risk of impermanent loss.
QuickSwap’s cryptocurrency is called QUICK. You can easily buy and sell it on Binance. You can also swap other tokens for QUICK using QuickSwap’s liquidity pools.
Automated Market Makers (AMM) like QuickSwap are hugely popular in
Decentralized Finance (DeFi). The Uniswap model has become a standard across different blockchains and Layer 2 platforms. QuickSwap provides the same functionality as Uniswap, but it’s based on the Polygon network instead of Ethereum. Although QuickSwap is a fork of Uniswap, key differences between the two have led to it being favored by some users.
QuickSwap is a fork of
Uniswap developed by Nick Mudge and Sameep Singhania on the Polygon blockchain platform. It offers a
Decentralized Exchange (DEX) experience using an Automated Market Maker (AMM) model for users to exchange tokens. QuickSwap has no order book, as users trade from pools of tokens known as liquidity pools.
Users can bridge
ERC-20 tokens from Ethereum to Polygon and trade any pair via QuickSwap, so long as there’s a
liquidity pool for it. Anyone can start a new liquidity pool by providing a token pair to earn transaction fees from other users.
The look, feel, and experience of QuickSwap are almost identical to Uniswap. Users can trade their coins without signing up or completing any
KYC (Know Your Customer) processes. All you need is a
wallet to connect to the platform and MATIC to pay your transaction fees. QuickSwap is also open-source and uses audited code from Uniswap to provide it with a level of trust and security.
Polygon (previously called MATIC) is an infrastructure for creating
Ethereum compatible networks. These
blockchains can also interact with one another, creating a
layer 2 ecosystem of interconnected blockchains. The Polygon Network is the project’s official sidechain that works with a
Proof of Stake consensus mechanism.
The Polygon Network's popularity comes from its speed as a
scaling solution and cheap
gas fees. Transaction fees are paid in MATIC tokens. As the network is compatible with the
Ethereum Virtual Machine, developers can
fork existing
DApps (Decentralized Applications) such as Uniswap onto the side chain.
Many users prefer Polygon for its quicker transaction times and extremely
low fees. Liquidity providers and swappers enjoy Uniswap’s
audited code with the advantages of the ERC-20 supporting Polygon Network. One large benefit is being able to trade ERC-20 tokens with a simple bridge, avoiding the higher fees of Ethereum. QuickSwap, therefore, provides a good balance between Ethereum compatibility, ease of use, and affordability.
QuickSwap uses the
AMM model to create liquidity pools of tokens that users can access to swap. Users don't trade as
makers or takers but instead interact with a
smart contract. Anyone can start providing liquidity by depositing a pair of coins in equal value.
In return, the liquidity providers receive LP (liquidity pool) tokens that act as a receipt for their share of the pool. These LP tokens are burnt when reclaiming your tokens. You can also provide them to a third party to use in yield farming, where your fees are constantly reinvested in the pool to compound your interest.
QuickSwap’s AMM model rewards liquidity providers with a 0.3% fee shared proportionally based on the
liquidity provided. The tokens' prices aren't determined via an
order book but through a formula known as the Constant Product Market Maker.
Let's use the ETH/DAI liquidity pool as an example. We'll refer to ETH as
x and
DAI as
y. With a Constant Product Market Maker formula,
x and
y are multiplied together to create a constant,
k, that can’t change.
x * y = k
The liquidity pool will offer you a conversion rate, in our case, 3,000 DAI (y) for 1 ETH (x). When you supply the 3,000 DAI to the pool and remove 1 ETH, it will have a higher supply of DAI and a smaller supply of ETH. This action causes the price of ETH to rise as k is constant. In other words, you are using your DAI to buy ETH. As more ETH leaves the pool, its price in comparison to DAI rises. The graph below demonstrates the relationship between the quantities of the two tokens.
Impermanent loss is a possible risk for anyone who provides liquidity to a liquidity pool. If the price of the tokens changes relative to when you add them, you'll end up with less dollar value when you withdraw. Note that this occurs if the prices rise or fall. The loss is impermanent as it's only realized once you remove your funds from the liquidity pool.
If the prices revert to their original levels, the impermanent loss will reverse. You may also get to the point where the fees received outstrip your impermanent loss. For a more detailed explanation and a dive into the mathematics behind impermanent loss, see our
Impermanent Loss Explained guide.
Unlike a centralized exchange, QuickSwap doesn't make money by charging fees to users. Liquidity providers are actually the ones who earn transaction fees. Just like Uniswap, there is a 0.3% fee on any swap made using a liquidity pool. You can claim earned transaction fees at any time and even reinvest them. You will receive fees equal to your proportion of the overall liquidity.
You can access QuickSwap via a desktop internet browser or your mobile device. Always make sure you use the following link: quickswap.exchange. You can exchange your coins easily for a fee from one of the liquidity pools.
1. Head to quickswap.exchange in your desktop or mobile browser.
2. Connect your wallet. You’ll need to use either a desktop browser extension wallet or a mobile wallet app.
MetaMask and
Trust Wallet are both suitable options. Your wallet should also support the Polygon Network.
3. Make sure you’re on the [Swap] tab to start exchanging tokens.
4. Select the token you’d like to swap from and the token you’d like to receive. In this example, we’re swapping MATIC for PBNB.
5. Click [Swap].
6. Preview the transaction in the pop-up window and confirm the request in your wallet.
QUICK is an ERC-20 token that launched in February 2021 and acts as QuickSwap’s governance token. 90% of the token’s total supply will be distributed as rewards to anyone liquidity mining, turning liquidity providers into platform stakeholders. QuickSwap's
governance model is common to other DeFi projects, including Uniswap and
PancakeSwap. Holders of QUICK can create proposals and vote on them to add new features or changes to the platform.
QUICK is a listed token on Binance’s exchange. You currently can’t purchase QUICK with a credit or debit card, but you can exchange cryptocurrency for the token. Binance offers the following pairs:
BNB,
BTC,
BUSD, and
USDT.
Once you have some BUSD, BNB, or BTC, head to the [
Classic] exchange page and select the pair you want to trade in the top left corner. You can use the search feature to narrow it down.
In our example, we’ll use QUICK/BUSD. On the right side of the screen, enter the total amount you want to purchase in BUSD. The quickest way to purchase QUICK is with a market order on the spot market. This way, you’ll be able to buy QUICK at the current market price.
Finally, click [Buy QUICK] to place your order and confirm the details.
Selling QUICK follows many of the same steps as the tutorial above. Your QUICK tokens will need to be in your Binance Spot Wallet, so make sure to transfer them if you have them in an external wallet. You can do this by heading to the
[Fiat and Spot] spot and clicking [Deposit] next to QUICK in the [Crypto Balance] section.
Head to the [
Classic] exchange page and select the pair you want to trade in the top left corner. You can use the search feature to narrow it down. In this example, we’ll search for QUICK/BUSD.
The quickest option is to sell your QUICK for the current market price with a market order. On the right side of the screen, make sure you are on the [Spot] tab and have selected [Market] for your order type. Enter the amount of QUICK you want to sell and press the [Sell Quick] button.
QuickSwap provides another option for trading tokens in a decentralized manner. With a Polygon address and some MATIC token, you can trade ERC-20 tokens cheaply and quickly compared to Uniswap or another Ethereum network AMM. However, this attractive feature might be time-limited. With the upcoming release of Ethereum 2.0, QuickSwap might lose some of its competitiveness in fees and speed.
