Steemit Crypto Academy Contest / S13W1 -Token Swap

Hello everyone!
Season 13 has started and Crypto Academy is back with another amazing contest this week and It is about Token Swap which is an interesting topic and It will be good to write about it.

^{Image edited on Canva}

So, Let's start without wasting any time.

Use your own words to define what a token swap is, and interpret the fate of this group of tokens when the final tokens are created.

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Token Swap can be defined as exchanging one Crypto token to another and It can be done on same blockchain and on different blockchain also.

Token swapping are of different types like We can swap one token to another type of token of different blockchains and there is a token swapping also which is swapping of old tokens into new one.

In simple words, We are exchanging our old tokens to new ones after some kind of upgrades or improvement in the blockchain according to market scenarios.

The fate of these tokens can be determined as New tokens will perform according to the blockchain upgrade system and how the project is performing.

The original tokens from which we have exchanged new tokens can be burned sometimes so that they can be destroyed permanently as they lose their value but in some cases, these are not burned and they remain on the blockchain.

Explain why do blockchains perform a swap? and is this operation essential during its launches?

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Blockchains perform token swap because of some reasons like they are migrating to another new blockchain and that's why, token must also belong to the same blockchain.

To make the project better, fast transactions and lower the fees, It needs an upgrade and In these upgrade, Blockchains often perform token swapping.

When blockchains completely change their fundamental roadmap, It is often known as hard fork, then It needs a new token and that's why, It perform token swap to introduce new tokens on the blockchain.

When a new project launches on a blockchain, then it is required to distribute it's token to all the users and It can be done through token swapping.

For distribution of new tokens, It is essential to swap tokens. For example, When a new project or blockchain launches, It release an airdrop earlier and the users who have participated in the airdrop and have done tasks, will receive the tokens through token swapping.

Show how such blockchain which performed token swap? take an existing example.

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As I have already told you about token swap, Now I will give an example of a blockchain which performed a token swap.

Recently In July, Bybit which is one of the major exchanges in the world has performed a token swap in which It's native token BIT was exchanged to Mantle token MNT. Let me tell you in detail.

Mantle token was based on Ethereum Layer 2 blockchain which is an upgrade and It has high scalability, great security and lower transaction fees.

Hence, Bybit decided to migrate it's native token BIT to MNT token and It also performed a genesis offering in which users have to hold some amount of usdt and bit tokens in their wallet.

I also participated in this and Luckily, I won that offering and I received 200 MNT. It was basically a rebranding to Mantle token from Bit token as MNT token was based on Ethereum Layer 2 blockchain.

This token swap was on Ethereum Layer 1 blockchain and Tokens were successfully migrated to MNT tokens which were based on Ethereum L2.

Tokens were distributed in 1:1 ratio and I have also hold 100 Bit token that time and I received 100 MNT tokens after swapping.

Has Steem Blockchain already performed token swap? If so, tell us how. If not, do you think it would have been better that used it?

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Yes, Steem blockchain has already performed a token swap in 2020. Steem token was swapped to hive tokens.

In February 2020, Justin Sun acquired Steem Blockchain and Some Developers and Witnesses of Steem blockchain were not happy with it and decided to part their ways from Steem ecosystem and It resulted in creation of Hive blockchain in March 2020.

Many users had shifted to hive blockchain at that time and tokens were distributed in ratio 1:1. Tokens were directly transferred to the hive wallet.

Those users who shifted to hive blockchain just had to create an account on hive blockchain and then, they received the equivalent amount of Hive tokens in their hive wallet which they had on steem wallet.

Are there any risks when using it?

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Yes, there can be some risks involved in token swapping which users should be aware of and I am listing these risks below.

There may be price difference in new tokens which are exchanged from old tokens according to market scenarios which can lead loss to a user. Like If a user has swapped 100 old tokens to new tokens but after migration, price has reduced of new tokens and In this case, User will incur loss.

We should be aware of scams such that there can be some fake news of token swapping and In that news, there can be many benefits shown and after seeing those benefits, many users can swap their tokens and lose their tokens. So, We should be aware of these scams and We should always check all the source and We should always do token swapping on legitimate platform to avoid any kind of loss.

There is also a deadline of token swap and If we have not swapped tokens on time and the time is over, then We will not be able to swap our tokens and We have only old tokens at that time and old tokens may lose their value permanently and In this case, We can incur loss.

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It was all about Token Swap. I am glad to write about this topic in detail. I have discussed about token swap, how it is applied and risks of token swap.

I would like to invite @malikusman1, @starrchris and @casv to participate in this contest.

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Thank You!