Wave 3 of their DeFi Voyage, focusing on the vital role of token swapping in the web3 and DeFi ecosystems. Linea emphasize how token swapping, comparable to currency exchange in traditional finance, enables the exchange of one blockchain token for another via decentralized exchanges (DEXs), presenting numerous opportunities in DeFi.

Wave 3 Timeline and Point

• Duration: Nov 20, 7:00 PM | Nov 28, 7:00 PM

• Point: 370

• Link to join: Wave 3

Knowledge to obtain

Key Takeaways

• Tokens swaps allow you to leverage the diverse opportunities that many DeFi protocols offer

• Token swaps are more efficient and cheaper on an L2 like Linea

Token swaps are the pulse of DeFi

Token swaps are a fundamental aspect of the decentralized finance (DeFi) ecosystem, providing access to a variety of tokens from different Web3 projects and DeFi protocols. These swaps, however, can't be made directly with fiat currency but require major cryptocurrencies like ETH for transactions. Layer 2 solutions (L2s), such as Linea, play a critical role in enhancing the efficiency of token swaps by offering faster and cheaper transactions compared to Layer 1 (L1) solutions.

Mechanics of Token Swapping

In token swapping, liquidity is crucial, typically provided by liquidity pools. These pools enable users to swap tokens, such as trading Token X for Token Y using an X/Y liquidity pool. Automated market makers and aggregators are also vital, with the former using liquidity pools to execute trades and the latter pooling liquidity from multiple decentralized exchanges (DEXs) to offer the best trade prices. Innovations like the ve(3,3) DEX model further optimize liquidity provider (LP) incentives.

Risks of Token Swapping

Much like any web3 activity, you need to ensure you cover all your bases when swapping your tokens.

Risks like slippage and liquidity risks are inherent in token swapping. Slippage occurs when there's a price difference between when a swap is initiated and executed, especially in low liquidity scenarios. Liquidity risk arises when acquired tokens cannot be easily traded. Smart contract bugs also pose risks, potentially locking funds or exposing them to theft. To mitigate these risks, setting a slippage tolerance before executing swaps is advisable, ensuring trades are canceled if the price drop exceeds a certain threshold.

Task to do

Core task: Swap at least $25 worth of ETH to any of the supported tokens on any supported DEX on Linea.

Task Instructions

The core task for this wave is focused on swapping some of the ETH you bridged to Linea, so that you can explore interacting with Linea’s DEX ecosystem. In order to perform this task, you can use any of the DEXs available on Linea from the list provided.

You can choose to swap ETH to any of the following supported tokens

• ETH

• USDC

• USDT

• WBTC

• DAI

• BUSD

• BNB

• agEUR

• KNC

• MATIC

Step-by-Step Guide

1. Choose the token swap partner of your choice & click “Continue”

2. Watch the walkthrough video to learn how to make a swap via the app

3. Click on “Swap Now” to go to the app of your choice

4. Make sure the selected network is Linea. Choose the token to swap as ETH token.

5. Choose any other supported token as the "to" token.

6. Ensure that you are getting atlest $25 worth of this new token post slippage.

7. Do the swap process

8. Note: cross chain swaps are NOT considered valid. Swaps must be on Linea only.

9. Note : Wrapping is not considered as swap. e.g. Eth to wEth or wEth to Eth is NOT considered a valid swap.

10. Once swap transaction is successful, come back & click on “Start Verification” then wait for verification to complete.

Bonus Tasks

• Use an aggregator to swap at least $25 of volume (post-slippage) from any supported token to any supported token of your choice on Linea.

• Execute more than 20 swaps in total, each with a minimum value of $5 (post slippage), within the duration of the token swaps wave on Linea.

• Swap more than $1000 (post slippage) in total volume across multiple DEXs on Linea.

• Swap at least $25 of ETH ( post slippage) into an RWA OR an LST on Linea.

• Review your favorite dApp of the Swap wave (has to be a partnered dApp) on DappSheriff.

Conclusion

More waves are on the horizon, and the Linea Ecosystem will provide updates as soon as they become available. Be sure to subscribe to receive our latest articles.

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