Steemit Crypto Academy Contest / S13W1 - Token Swap

Assalamualaikum everyone!

Welcome to the post. Hopefully, all of you will be doing well and enjoying the time with the grace and blessings of Almighty Allah. Today, I'm here to be a part of the week 1 contest in the beloved SteemitCryptoAcademy community. The topic of discussion for this week is very much interesting, Token Swap. So, let's start the fun without any wastage of 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.

The meaning of the token swap can easily be determined from it's name. Token swaps are exchanges between holders of one type of token and holders of another type of token. This can be done for a number of reasons, including moving tokens to a different blockchain, merging two projects, or rebranding a project.

To complete a token swap, users must normally submit their old tokens to a specific address. The fresh tokens will subsequently be added to their wallet. Some token swaps are automated, but others need users to claim their new tokens manually from the exchange or swap portals especially created for the swaps.

Talking about the fate of such tokens...

The fate of the old tokens when the swap is finished is determined by the project. The old tokens are often burned, which means they are permanently destroyed. In other circumstances, the old tokens are changed at a set rate to the new tokens. In other cases, old tokens may still exist, but they may no longer be supported by exchanges or wallets.

If a token swap is accomplished and all of the old tokens have been changed to the new tokens, the old tokens have no value. This is because they will no longer be able to access any of the project's products or services. In some situations, the project may offer to purchase the old tokens at a reduced price. This is usually done to incentivize users to engage in the token swap while also reducing the supply of old tokens in circulation.

However, if the project does not offer to purchase back the old tokens, they will likely lose value. Because users will no longer require them to access the project's products or services, there will be no demand for them.

• Some Technical Points:

Smart contracts are commonly used to implement token swaps. Smart contracts are contracts that execute themselves and are stored on a blockchain. They can be used to automate a wide range of processes, including token swaps.

The project team will need to build a smart contract that outlines the terms of the token swap in order to implement it. This comprises the swap's beginning and ending dates, the conversion rate between old and new tokens, and the address to which users should transfer their old tokens.

After the smart contract has been launched, users can access it to exchange old tokens for new tokens. The smart contract will automatically verify that the user is submitting the correct quantity of old tokens before delivering them the appropriate number of new tokens.

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

There are many reasons behind the use of the Token Swap in any blockchain platform. Some of the major reasons behind the swapping of tokens are listed below.

Token swap could be done to transfer tokens to a new blockchain. This is frequently done to benefit from lower transaction fees or faster transaction timeframes. To economize on gas fees, a user might exchange their Ethereum tokens for Binance Smart Chain tokens, for example.

This can also be done to combine two projects. When two projects merge, their tokens are frequently exchanged for a new one. This contributes to the creation of a cohesive effect for the two projects.

Another major reason behind the token swap is the Rebranding of a project. When a project rebrands, the old tokens may be exchanged for new tokens. This contributes to the project's new identity.

Another important point to notice here is, to raise funds. Token swaps are used by some projects to raise funding for development. In this instance, investors will exchange their tokens for the project's tokens, hoping that the project will be successful and their tokens will appreciate in value.

Is this Operation Essential?

Whether or not a token swap is required during the launch of a blockchain depends on the blockchain in question. Some blockchains are established with native coins, whereas others are launched with no tokens. If a blockchain is launched with no tokens, it will require a token swap to create and distribute its tokens to users.

The Ethereum network, for example, was launched without its own native token, Ether (ETH). Instead, consumers could purchase ETH through a token swap that took place in 2014.

Other blockchains, such as Solana, have their own native tokens. In this situation, a token swap is not required during the blockchain's activation. However, for one of the reasons given above, the blockchain may opt to undergo a token swap in the future.

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

To demonstrate how a blockchain does a token swap, consider the Binance Smart Chain (BSC). In 2020, BSC was launched as a smart contract platform compatible with the Ethereum Virtual Machine (EVM). This means that developers can use Ethereum smart contracts on BSC without making any changes.

The Binance team conducted a token swap in order to attract users and developers to BSC. Users could exchange their Ethereum tokens for Binance Chain Native (BNB) tokens at a 1:1 ratio. The BNB tokens were subsequently exchanged for BEP20 tokens, which are BSC's native tokens.

The Binance team constructed a smart contract that outlined the terms of the token swap in order to carry out the swap. The start and end dates of the swap, the conversion rate between Ethereum and BNB tokens, and the address to which customers should send their Ethereum tokens were all included.

Users could engage with the smart contract after it was released to exchange their Ethereum tokens for BEP20 tokens. The smart contract would automatically verify that the customer was sending the correct quantity of Ethereum tokens before delivering them the appropriate number of BEP20 tokens.

The token swap was a success, and it contributed to BSC attracting a huge number of users and developers. BSC is now one of the world's most popular blockchains and all of the crypto traders are almost aware about this chain.

• Some Other Examples of Token Swap:

In 2015, Ethereum switched from its initial ERC20 token standard to the ERC20R standard. This was done to improve the Ethereum network's security and overall scalability.

In 2020, Solana conducted a token swap to distribute its native token, SOL, to early contributors.

In 2021, Polygon completed a token swap to move its native token, MATIC, from the Ethereum blockchain to the Polygon blockchain.

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?

Yes, the Steem blockchain has already performed a token swap. In early 2020, a group of Steem witnesses were dissatisfied with the Steem platform's development. They were particularly concerned about the growing power of Tron founder, Justin Sun.

He had purchased a big interest in Steem and was attempting to influence the platform's direction. Witnesses who were dissatisfied with Sun's influence planned to build Hive, a new blockchain that would be a fork of Steem. Hive was introduced on March 20, 2020, with a new token, HIVE, which was given at a 1:1 ratio to Steem holders.

The Steem token swap allowed Steem holders to trade their STEEM tokens for HIVE tokens. There was no minimum or maximum quantity of STEEM that could be swapped, and the token swap was available to all Steem holders.

Users have to transfer their STEEM tokens to a specified address in order to swap them. They would subsequently be credited with the appropriate number of HIVE tokens in their wallets.

The token swap was a success, with more than 90% of Steem holders taking part. The Steem blockchain was split into two independent blockchains as a result of the token swap: Steem and Hive.

Are there any risks when using it?

Token Swap is one of the most important event that can occur in the history of a blockchain. Yes, there are potential risks to using a token swap. Among these risks, some of the important ones are listed below.

• Smart contracts are commonly used to implement token swaps. Smart contracts are contracts that execute themselves and are stored on a blockchain. If there is a defect in the smart contract, hackers could exploit it, resulting in the loss of user funds.

• Users may have problems swapping their tokens if there is insufficient liquidity in the token swap. Users may have to wait a long time for their swap to be completed, or they may have to accept a lesser price for their tokens as a result.

• Cryptocurrency prices can be volatile. This means that the value of the tokens received by users in a token exchange may fluctuate dramatically.

In addition to these general risks, special risks linked with individual token swaps may exist. For example, if a token swap is carried out by a fresh or inexperienced team, the potential of fraud or misconduct may be enhanced.

Before engaging in any token swap, it is critical to properly understand the dangers involved. Users should also do due diligence to confirm that the token swap is being carried out by a credible team and that the smart contract has been regulated by a qualified security team.

Conclusions

Token swaps are an efficient way for users to exchange one type of cryptocurrency token for another. However, before engaging in any token swap, it is critical to be informed of the risks involved. Smart contract risk, liquidity risk, and volatility risk are some of the general risks connected with token swaps. Steem blockchain has also undergone a token swap while the Hard Fork of 2020 and the creation of new blockchain, Hive, with the native token (HIVE) was happened.

I would like to invite my friends @malikusman1, @suboohi, @patjewell and @ngoenyi to be a part of this amazing contest.