How To Swap Tokens On A DEX – A Step By Step Guide

The following guide walks readers through swapping tokens on a decentralized exchange (DEX). It also breaks down the process step by step so readers will be comfortable swapping on their own, as well as being familiar with the interface of a DEX.
Published: August 10, 2023   |   Last Updated: February 24, 2024
Lead Writer
Matt Pearlstein

Centralized exchanges allow you to purchase crypto and then they custody the assets on your behalf. While this offers convenience for users, you don’t truly own and control these assets yourself.

And with trust in centralized exchanges at an all time low, “not your keys, not your crypto” has never been more relevant. Luckily, we’re all set up and funded a crypto wallet now and ready to take the next step: swapping tokens on a decentralized exchange (DEX).

How To Swap Tokens On A DEX

DEXes allow people to swap tokens with other users. But instead of being managed by a centralized entity, these exchanges are powered by smart contracts on the blockchain.

As a result, here are some of the benefits that DEXes offer:

  • No deposits are required, users are able to trade directly with assets in their wallet
  • Users bypass account creation, hold periods and trading restrictions
  • All swaps are settled immediately and users have immediate access to their funds
  • Users have the ability to trade early stage tokens before they are listed on larger exchanges

Not only do DEXes have their advantages, but they are also the only way to swap tokens when you are using a self-custodied wallet.

To kick off our Public Wallet, we swapped 40% of our USDC ($4,000) for ETH on Uniswap. We feel very strongly about ETH and want that to be one of our larger holdings. There are also a lot of interesting things we can do on chain with ETH, which you will see soon.

Our swap returned us ~2.18 ETH for 4,000 USDC. Since we transacted at a time when the network is usually not very congested, our gas fee only cost us $5.76!

Now we’ll dive into how readers can swap on their own below.

Step 1: Getting Familiar With Uniswap

When you arrive on Uniswap, this is the interface you will see:

Here’s everything you need to know:

Uniswap trading interface

1/ The headings in the top left are the different things that you can do on Uniswap. Today we will only be focusing on swapping tokens, but we will be diving into the others in the future.

2/ The top right is where you connect your wallet and select the blockchain network you want to swap on. At this time, Uniswap supports 8 different networks, but we will be sticking with Ethereum for today.

Once you press “connect”, a popup will prompt you to approve this transaction in your wallet across two screens. 

Connecting Metamask Account

The first allows you to choose a specific account if you have multiple. The second shows which permissions you are granting the protocol when connecting your wallet. Once connected, you are ready to swap!

Step 2: Making A Swap

Now that we are familiar with the basics, we will zoom in on the middle box that allows us to swap:

Swap Tokens on Metamask

Using the two drop downs, you can select which tokens you would like to swap. Most tokens can be swapped with either ETH or stablecoins.

When you go to select a token, you will see this drop down:

Swap a token with Metamask

Uniswap provides a list of the most popular tokens, as well as your current holdings. There is also a search bar at the top where you can import any tradable token on the blockchain.

Just like every wallet has its own address to identify it, every token also has its own address. You can find this address on popular price tracking sites like CoinMarketCap or Coingecko, as well as the token’s website.

Once you copy and paste the token address into the search bar, you will be able to import the token and trade it immediately. Now you just need to select the amount of tokens you would like to swap, and Uniswap will estimate your expected output.

Swapping tokens with Metamask

The circled gear above is Uniswap’s swap settings. While this should be left untouched in most situations, it is important to understand slippage.

Slippage is denominated as a percentage and represents the highest amount of price variance that a token swapper is willing to accept.

For example, if you set your slippage to 2%, the order above would only fill if selling 2 ETH would return you within 2% of $3,707. If this is not the case, the swap would not go through.

Step 3: Being Aware Of Fees

In addition to slippage, there are two fees that swappers need to be aware of:

  • Fees to liquidity providers (LPs): DEXes use liquidity pools to provide the funds for users to trade with. We won’t dive into the specifics on these yet, but it is important to note that they take a fee in return for providing liquidity.

This fee is usually only 0.05% – 0.30%, which is much cheaper than the fee a centralized exchange would charge.

  • Gas fees: Gas fees are the fee that validators receive for confirming network transactions. As a result, they are not exclusive to swapping tokens, they are required whenever conducting any type of transaction on the blockchain and are separate from Uniswap.

The most important thing to note is that while LP fees are static, gas fees are a direct reflection of how congested the blockchain is at any given time. During the last bull market, people were paying over a hundred dollars at times for a simple swap on Ethereum!

To save money, we recommend using a gas tracker to make sure you are utilizing the network at times when transaction fees are low. In general, weekends and early mornings (EST) have proven to be historically low gas times.

Step 4: Using A Trezor

If you’re using cold storage to protect your assets, there is one additional step you will need to be aware of when transacting.

Each time you sign and approve a transaction in your wallet, you will also need to approve it on your cold storage device. After ensuring your cold storage device is plugged in, you will be prompted to sign into your device:

Swap using a Trezor

Once signed in, each transaction will also require an approval from your device. When using a Trezor, the approval will look like this:

Just ensure that all of the details match on the device and you are all set.

Making A Swap In MetaMask Portfolio

In addition to swapping on a DEX, MetaMask has a swap feature built directly into their portfolio dApp in their wallet.

You can find all of their MetaMask Portfolio offerings in the middle of the wallet’s interface:

Swap in Metamask Portfolio

It is important to note that their swap feature is a DEX-aggregator. This means that it compiles the trade routes of many different DEXes and provides users with the most efficient and cheapest swap. It also allows you to swap from the convenience of your own wallet.

But these perks don’t come without a price. Note that you will pay a service fee to MetaMask of 0.875% when using their built in swap feature (as well as gas fees).

Swap tokens using Metamask Portfolio

Next Steps

If you just created your first wallet, we hope you have found these guides helpful and are starting to feel like a pro.

If this isn’t your first rodeo, thanks for bearing with us through the setup. We’re finally ready to explore all that the blockchain has to offer!

Next week we will be staking some of the ETH that we purchased and showing you a few cool things you can do with your staked ETH for additional yield.

For now, readers can track our wallet on their own through DeBank. Simply go to their site, paste in our wallet address and follow our journey in real time under “portfolio”. 

Here is the Milk Road Public wallet address:


Additional Resources

This report is for informational purposes only and should not be relied upon as a basis for investment decisions, nor is it offered or intended to be used as legal, tax, investment, financial or other advice. You should conduct your own research and consult independent counsel on the matters discussed within this report. Part performance of any asset is not indicative of future results.

It should also be noted that the writer(s) of this report may hold assets mentioned in the article at the time of writing.

Matt Pearlstein
Matt Pearlstein
Matt found crypto in 2016 and left TradFi to go full time in the industry a few years back. He is deep in the weeds of DeFi and also likes to go to the beach and play basketball.

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