The world of cryptocurrency is constantly evolving, and one of the most exciting developments in recent years has been the rise of decentralized exchanges, or DEXs for short. These platforms allow you to trade cryptocurrencies in a truly decentralized and peer-to-peer manner, powered by smart contracts, without the need for a centralized exchange acting as a middleman.
But if you're new to the world of DEXs, the process of getting started can seem daunting. That's why we've created this step-by-step guide to help you navigate these complex crypto trading platforms. Since they all operate in almost the same way, we will be using one of the most popular BNB chain-based DEXs out there: MelegaSwap.
MelegaSwap is an automated market maker (AMM) DEX that's built on the Binance Smart Chain (BSC), and it's quickly becoming a go-to platform for traders and investors who want to swap, provide liquidity, and farm yield to earn passive income.
In this Part 1, we'll walk you through the process of using MelegaSwap to make your first cryptocurrency trade.
So whether you're a seasoned crypto trader or a newcomer to the space, this guide will provide you with all the information you need to start trading on MelegaSwap like a pro. Get ready to learn how to use DEXs, step-by-step!
What are decentralized exchanges (DEXs)?
Decentralized exchanges are simply cryptocurrency exchanges that allow users to trade cryptocurrencies without the need for intermediaries such as banks or brokers. Instead of using a centralized authority or “custodian” to process transactions, DEXs use smart contracts on a blockchain network to facilitate transactions.
Unlike centralized exchanges like Binance, FTX, Kraken, and so on, DEXs do not rely on individuals and are more secure, transparent, and less susceptible to hacks or fraud.
Step-by-step guide on how to use DEXs
As previously mentioned, most decentralized exchange platforms operate in almost the same way, so the following guides can also be applicable to other platforms besides MelegaSwap. Just follow the process and start trading in a transparent and easy manner:
Step 1: Set up a non-custodial crypto wallet and fund it with your preferred coin.
Step 2: Connect to a DEX. In this case, MelegaSwap
Step 3: Input the amount/number of tokens to trade and swap
Step 4: Confirm the transaction in your wallet
Set up a non-custodial crypto wallet and fund it with your preferred coin
Before you start using a DEX, you need to have a cryptocurrency wallet that supports the tokens you want to trade and the blockchain network they are based on. There are several types of wallets to choose from, including hardware, software, and mobile wallets, to connect with MelegaSwap. You can use popular wallets like MetaMask, Exodus, or Trust Wallet.
NOTE:
While opening a non-custodial wallet, you will be given a 12- or 24-secret phrase. Make sure to write them down in a very secure place, as they are always non-recoverable once lost.
Furthermore, after successfully creating your wallet, you will need to fund it with the cryptocurrency you want to swap for another token. To do this, click the “deposit” button and select the token you want to deposit. You can buy this token from centralized exchanges like Binance or Coinbase that accept your local currency. However, you should make sure that you know the specific coins and tokens supported on the DEX.
Copy the wallet address provided and use it to transfer the funds from the centralized exchange to your crypto wallet.
Connect to a DEX. In this case, MelegaSwap
Once you have set up your wallet and funded it, the next step is to connect to a DEX. There are several DEXs to choose from, depending on which blockchain network the token you want to trade is built on. Meanwhile, MelegaSwap is built on the BNB chain. Simply access melega.finance/swap from your browser or the in-built Dapp browser in your wallet, and click the “connect wallet” button.
Input the amount/number of tokens to trade and swap
Once your wallet is funded and connected to the DEX, you can start trading. To instantly swap your BNB, USDT, or BUSD for other tokens, click the “swap” button and select the tokens you want to trade. Enter the amount you want to trade and click the “Swap” button again. The DEX, being an automated market maker (AMM), will automatically match your order with a counterparty and execute the trade.
NOTE:
The token you want to sell will always be at the top, while the token you want to buy will be at the bottom of the trading page. In the image below, for instance, the trader is selling BNB in exchange for MARCO.
4. Confirm the transaction in your wallet
After placing an order, the DEX will prompt you to confirm the transaction inside your crypto wallet. You will need to review the details of the trade, including the tokens, amounts, and fees, and then click on the “confirm” button. The DEX will then process the transaction, and the tokens will be sent to your wallet almost immediately!
After completing the trade, you can easily view the tokens in your wallet and even sell them back to USDT or BNB by following the same process – connecting your wallet, inputting the amount, swapping, and confirming.
Risk warning: Cryptocurrency investment or trading is subject to high market risk. Hence, you might lose your money in the process. Please do adequate research and plan your investments cautiously. We at MelegaSwap will always make the best efforts to list high-quality and potential coins, but we will not be responsible for your losses in any way.
Closing thoughts
Using DEXs is a straightforward process that anyone can follow. By following these four simple steps, you can start trading cryptocurrencies on a DEX with ease. Remember to choose a reputable DEX like MelegaSwap and always double-check the details of your trades before confirming the transaction. Happy trading!