How to Use SyncSwap and Check Pools, Prices, and Risk

SyncSwap is a decentralized exchange for swapping tokens and supplying trading pools on Ethereum layer 2 networks. To use the SyncSwap DEX, your wallet needs tokens on the chosen network and enough funds for transaction costs. Use SyncSwap to make the swap or add your tokens to a pool.

Key points

• For a swap, check the amount you will receive after the pool fee and price impact.
• For liquidity, choose a pool that fits the two tokens you want to hold.
• Tokens on another network must be moved before you can use them.

What happens when you use SyncSwap?

A swap trades against a pool of tokens supplied by other users. An automated market maker, or AMM, is the rule that sets the price as those pool balances change. The more your trade changes the balances, the worse the rate becomes.

A Classic Pool suits pairs whose prices can move far apart, such as ETH and a dollar token. Its price follows a balance rule often written as x × y = k. A Stable Pool suits tokens expected to stay close in value, such as two stablecoins. A stablecoin is a token designed to track a currency, usually the US dollar.

People who supply a pool are called liquidity providers. Their tokens make trades possible, and they can earn a share of trading fees. The fee amount and the return from providing liquidity can change, so check the figures for the pool you intend to use.

What do you need before a swap or deposit?

You need a wallet you control, the tokens you plan to use, and access to a supported layer 2 network. A layer 2 processes transactions separately from Ethereum’s main network. Your tokens must already be on the network where you plan to trade.

For example, USDC held on Ethereum’s main network cannot be spent as USDC on ZKsync Era. Moving it requires a bridge, which transfers value between networks. Check that the transfer has arrived before trying to trade, and confirm the token’s contract address if two tokens share a name.

Keep funds available for gas, the network charge for recording a transaction. The amount varies with network activity and the work the transaction requires. A token approval, which lets a trading contract use a specified token, may also require a transaction before your first swap or deposit.

How do you check a swap before confirming it?

Choose the token to spend, the token to receive, and the amount. Then compare the quoted return with the amount you expected from the market price. The quote can be lower for three separate reasons:

• Pool fee: a charge taken from the trade.
• Price impact: the change your trade causes in the pool’s price.
• Gas: a network charge paid in addition to the swap.

Say a Classic Pool holds 100 ETH and 200,000 USDC, so its starting price is 2,000 USDC per ETH. Selling 1 ETH would return about 1,980 USDC before the pool fee. That roughly 20 USDC difference is price impact: the pool has less USDC and more ETH after your trade.

Also check slippage, the extra price change you allow between seeing a quote and completing the trade. A 0.5% slippage limit on a 1,980 USDC quote allows a final return of roughly 1,970 USDC. It does not remove the price impact already included in the quote. If the return is too low, reconsider the trade size before confirming.

When does providing liquidity make sense?

Providing liquidity makes sense when you want to hold both tokens and accept that their amounts may change. You deposit a pair into a pool and receive an LP token, a receipt for your share. When you withdraw, that share returns the pool’s current mix of tokens, plus any fees it has earned.

For SyncSwap liquidity pools, I would consider a Stable Pool only when I trust both tokens to hold similar values. If one dollar token loses its peg, meaning it no longer trades near one dollar, the pool can end up holding more of the weaker token. A Classic Pool accommodates a pair such as ETH and USDC, but a large price move still changes what you withdraw.

For example, put $1,000 of ETH and $1,000 of USDC into a Classic Pool. If ETH doubles in price, your share could be worth about $2,828 before fees. Holding the same tokens outside the pool would be worth $3,000. The pool sold some ETH as its price rose; that $172 gap is called impermanent loss. Trading fees may reduce the gap, but they may not cover it.

For an occasional trade, I would check the final token amount and total cost. I would supply liquidity only if I was comfortable holding both tokens and receiving a different mix when I withdrew.