Crypto: Decentralized Exchange & Metamask
Updated: Aug 27, 2020
In my last post, I mentioned about the convenience that DEX-es like 1inch brings about so I will talk about DEX-es and my experience with it so far.
What is a Decentralized Exchange?
It is a cryptocurrency exchange where users can exchange their tokens anonymously without the need for any 3rd party to facilitate the transaction.
All users have to do is to connect their crypto wallet to the DEX, select the coin they wish to swap and let the smart contract does its thing.
It is that simple.
Of course, the transaction won't happen for free. Users have to pay miners a certain fee (gas) to do the work for you.
Why use Decentralized Exchange?
No KYC: Swapping is done anonymously so there is no need for any verification of identity. No need to create an account as well hence completely hassle free.
No need to pre-fund your trades: You can send your coins to Metamask, connect to the DEX and trade.
Access to a large selection of tokens
So far, I've only tried using 1inch DEX Aggregator which has been great and easy to use. 1inch ensures the best possible exchange rate by splitting your order across multiple DEX-es.
As for other DEX-es, I haven't tried them yet so I can't say much.
Risks involving Centralized Exchanges
If anyone has the time, quickly google "hacked crypto exchanges" and you would come across several articles like this here detailing significant hacks on centralized exchanges for last year 2019. Millions of dollars were lost and personal information were stolen.
So, remember to take your coins off the exchange after trading. At the very least, place them in a mobile wallet if you don't have a hardware wallet. Leaving coins on the exchange is just waiting to be stolen as the "laws" of crypto world states "not your keys, not your crypto."
Frankly speaking, hardware wallets actually doesn't cost a bomb. Basic cold wallets such as Ledger Nano S and Trezor One cost about SGD$100 which is a cheap price to pay to protect your capital.
Downside of Decentralized Exchange
Unfortunately, fees are quite high because of the high volume of transactions going around in the ERC20 network.
At the point of writing, exchanging 10 ETH valued at USD$3139 to DAI will cost about USD$19 which is 0.6% of your trade. It is 6 times more expensive than trading on Binance. If you tried putting in more zeroes, the fees actually increases.
This is where 1inch is special as they can help to lower the transaction fees through the use of their Chi GasTokens, you can read their documentations here.
Else, not much can be done about the fees. Perhaps, one could maybe wait to trade during a time frame when the network is less congested or wait for Ethereum 2.0 to launch.
One last item: Metamask
Metamask is a browser wallet that you can install as an browser extension on Google Chrome, FireFox and Brave. What's really nice about Metamask is that after logging in, it automatically connects with various crypto platforms, giving users a smooth experience. Most importantly, it is exceptionally easy to use.
A tip I would like to share is for the Brave users, you don't need to install the browser extension. Metamask is already integrated in the Brave browser. To access Metamask, go to Settings followed by Crypto Wallets. Go ahead and create your account from there.
If you have an existing account, you can import it using your 12 words seed phrase.
Let's say for example, I want to connect Metamask wallet to 1inch. You will have to first turn off your Brave Shields in order for 1inch to detect that Metamask is present.
Then, you should be able to see the Metamask option in the top left hand corner.
I had a really hard time finding the solution for this, spent quite some time searching haha.
Lastly, do not leave your coins in Metamask!
Anyway, that's it for now. Cheers!
Disclaimer: The information listed here is strictly my personal opinion. It should not be regarded as investment advice. Please do your own due diligence.
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