Tuesday, June 6, 2023

Token Swap

by Hideo Nakamura
Token Swap

Token Swap – What is it?

A token swap, also known as a token migration or token conversion, is the process of exchanging one cryptocurrency token for another. It involves two parties exchanging tokens on either side – one party sends its own tokens to the other and receives different tokens in return. Token swaps are used by companies that issue their own cryptocurrencies to upgrade or migrate from one blockchain protocol to another. This could be done for various reasons including updating existing protocols with new features, increasing transaction speed and scalability, or improving security measures.

In some cases, a company may decide to change their underlying blockchain infrastructure altogether and perform an entire platform-level switch which requires swapping out all existing tokens for new ones issued on the new platform/protocol. In such cases, users need to exchange their old crypto coins or tokens into the newly created versions in order to continue participating in projects using them.

The most common type of token swap occurs when a company decides to transition its native coin from one network protocol (e.g., Ethereum) over to another (e.g., TRON). The purpose behind this kind of move might be due to faster transaction speeds available on alternative networks compared with Ethereum’s more congested state. Such switches often require users holding these coins/tokens at specific exchanges/wallets where they can then trade them out for newer versions that are compatible with the target network protocols they wish use instead afterwards — otherwise they would become obsolete if not exchanged beforehand according tot he terms made available by issuing entities priorly given notice about such changes before hand .

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