Coinbase Wallet now Supports Token Swaps via BNB Chain and AVAX too
Coinbase, the biggest cryptocurrency exchange in the US has announced that it will now support BNB Chain and Avalanche – a proof-of-stake (POS) blockchain network – on its non-custodial wallet application. These new additions will allow users to “swap” between tokens, making moves smoother than ever.
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The exchange made this announcement official via a blog post on May 23. To understand how this new feature can affect your trades, let’s discuss swaps a little further.
What is a Swap in Crypto?
A swap is an exchange of one cryptocurrency for another without having to sell it on an exchange. It is often done to exchange a currency that has high volatility for one that is more stable, or vice versa. You can also use a swap to trade in your coins for another currency if you think the price is about to either skyrocket or crash.
Swaps can be done across networks. The only limitation is that the DEX (decentralized exchange) you are using to perform the swaps should support the network whose tokens you are interested in swapping.
Until the announcement, Coinbase Wallet only supported Ethereum and Polygon, which meant that users could only move tokens of those networks. With the addition of BNB Chain and Avalanche, you can now access thousands of tokens more supported by these networks.
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This expansion makes Coinbase Wallet’s in-app DEX one of the only few that support all the four major blockchain networks in the world. In Coinbase’s own words, it is providing users “even more incentives to trade on Coinbase Wallet… [by] letting you swap a greater variety of tokens than most of the current platforms currently.”
Your capital is at risk.
Difference between Crypto Trading and Crypto Swapping
Trading is when you are buying and selling one crypto asset for another. It is like buying a stock or a bond, except that instead of dollars, you are trading with other cryptocurrencies.
Swapping is different from trading because it refers to exchanging a currency for another one directly— meaning, one person gives their currency over to another person who then gives them the currency that they want in return. Swapping is also known as peer-to-peer (P2P) trading because it is carried out between two peers without any DEX interference.
Since DEXs don’t act as a broker but as a facilitator in swaps, you can refer to exchange platforms as permissionless trading services in this case.
Your capital is at risk.
Everything else you need to know about Coinbase Wallet’s new Swap Feature
The demand for decentralized finance (DeFi) solutions is seeing an upward trend at present. According to a 2022 report by Digital Asset Outlook, people traded more than $1 trillion worth of cryptocurrencies on DEXs last year, in 2021. That’s an 858% increase from 2020. And Coinbase seems to be repositioning itself in the market to benefit from this trend.
To achieve that, Coinbase Wallet has simplified moving tokens on its DEX. All you have to do is click on “Trade” in the mobile app or “Swap” on the browser extension to move your tokens.
Additionally, you will need to hold a certain quantity of native tokens from the network of your choosing to cover the network’s transaction fees to complete the swap.
Many Investors trust Coinbase Wallet more than any other wallets
For instance, if you want to move tokens on BNB Chain, you will need to have BNB (the network’s native token) to proceed with the trade.
Coinbase Wallet already allows you to compare the fees of all the exchanges through the feature named 0x API – a liquidity aggregator that facilitates peer-to-peer asset exchange – so you don’t have to make the extra efforts and can enjoy a seamless trade.
“Adding support for networks such as BNB Chain, Avalanche, and Polygon means you can trade more tokens, faster, and with more affordable network fees,” explained Coinbase in its blog post.
Coinbase’s Future Plans for Web3
Coinbase’s announcement very clearly indicated three of its major plans for the future, one of which directly shows that these additions are being made to expand to web3.
The first and the most expected one is that the company will be adding more networks to its DEX in the upcoming months to provide its users access to a wider variety of tokens.
Second, it is planning to add support system for ‘network bridging’, which will enable users to transfer tokens across various networks effortlessly–something that has been long-awaited in the company’s crypto community.
Third, Coinbase planning for the web3 and partnering with Ava Labs could mean that it would start supporting metaverse exchanges through its Wallet, especially considering that Avalanche (network developed by Ava Labs) already financially supports investments related to the metaverse, blockchain-based games, and virtual worlds.
Your capital is at risk.
It wouldn’t be surprising if Coinbase goes through with this because the company’s competition demands it to step up its game. Just last week, Robinhood announced that it will be launching a non-custodial, web3 cryptocurrency wallet.
One of the biggest retail trading platforms in the US, Robinhood’s official statement confirmed that “this new, multichain, web3 wallet will launch as a standalone app… Customers will be able to hold the keys for their own crypto.”
Not only that but the wallet will also allow customers to trade and swap crypto without paying heavy fees, store non-fungible tokens (NFTs), connect to different NFT marketplaces, and profit from their digital assets.
Competition or not, it is no doubt that Coinbase is continually innovating and evolving. Although there are at least 65 companies in the crypto sector that currently hold the unicorn status, Coinbase is the only crypto company to enter the Fortune 500 club. And the news came just one day after the company announced the incorporation of BNB Chain and Avalanche into its DEX.
But even that isn’t enough to keep Coinbase’s stocks from plummeting. The company has been experiencing its worst low.
Having said that, so far, the announcement regarding the BNB Chain and Avalanche hasn’t caused any major changes in its stocks even though the company has already lost 75% of its value this year due to the massive disruptions in the global macro economies.
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