This website uses cookies to ensure you get the best experience. By using the site, you agree to our privacy policy and Terms of use.
important steps to know before you buy crypto on decentralized exchanges

Four Important Steps Before You Buy Crypto on Decentralized Exchange

Published On: August 13, 2022

Main Points:

  • If you buy crypto on decentralized exchanges (DEX), it requires more technical knowledge as compared to standard crypto trading on centralized exchange (CEX). You need to know how to connect your web3 wallet application (for example, Metamask) to the decentralized exchange’s front end. You must also be careful with fake phishing websites that try to imitate the decentralized exchange’s front end.

  • Anyone can list any crypto token on a decentralized exchange. You must always be careful with fake tokens and always verify their token contract address.

  • Many traders go to decentralized exchange to swap low cap and mid cap tokens. Remember that most of these lower cap cryptocurrencies have bigger risks compared to the bigger altcoins

  • Make sure you set the slippage and gas fees properly
Given the fact that decentralized exchanges are riskier to use for newbies, it’s important to understand that you must have strict standard precautions before you engage in any kind of crypto swap. 

The idea with crypto swap on decentralized exchanges is that you must always minimize all the potential risks. There is nobody to help you when you make a mistake. You will interact directly with smart contracts and all transactions will be instantly finalized.

First Step to Buy Crypto on Decentralized Exchanges

For the purpose of this guide, we would use our own DeSwap. Most other decentralized exchanges (DEX-es) use a very similar mechanism and frontend layout for web3 connection and crypto swap. Just by learning from this guide, you should be able to do crypto swaps on other decentralized exchanges as well.

DeSwap allows crypto traders from all over the world to make crypto-to-crypto swap 24/7. All transactions are handled instantly by a set of smart contracts. DeSwap has advantages over other decentralized exchanges, such as better incentive mechanisms, faster and simpler swap processes, and cross-chain swaps.

To start, you need to have a crypto account on Metamask, Trust Wallet, Bitkeep Wallet, or other wallet applications. For the sake of this guide, let’s just use Metamask.

We assume you already know all the basics of Metamask. You can read our How To Use Metamask article if you don’t know how to use the Metamask extension on your browser.

Now, go to Make sure you do not go to a phishing or fake website. There’s an easy way to verify this. Click the padlock icon in your browser search bar and check the SSL certificate.
check the SSL certification to be absolutely sure you don't visit a phishing website
If it’s correctly issued to the same domain, you are visiting the right website. Go bookmark it on your browser so you won’t mistype the next time you intend to visit the same DEX.

Next, you need to make sure your Metamask is connected to either Ethereum, Cube Network, or Binance Chain (also known as Binance Smart Chain). Find the Connect Wallet button on Deswap page and click it.
select Connect Wallet button
Select Metamask from the modal, and the text “Connect Wallet” will be replaced by your wallet address on Metamask. Make sure you are connected to the right network where you intend to make the trade (for example, if you want to sell AAVE token on Ethereum network, you must make sure you select Ethereum on the network selection - left to the Connect Wallet button)

After you finish your Metamask connection to the Deswap page, you should see your token balances correctly displayed inside the Swap table on the center-right section.
find the tickers on the right column
You can select the token you want to trade from and to. Click the dropdown next to the token tickers to change them (see the red boxes above).
find the token ticker or copy-paste token contract address
For example, to sell your AAVE token, click the dropdown inside the From field, and select the token AAVE from the Select A Token list like in above screenshot.

Step 2 - Verify Token Contract Address

Another important step to take before you buy crypto on decentralized exchanges is to always verify the token contract address. Even if the token is included in the Select A Token list by default, you should always verify the token contract address.

How to do this? It’s pretty easy. Just like in step 1 above, click the dropdown next to the token ticker. Inside the Select A Token list, copy-paste the token contract address from a trusted source. For example, this is the token contract address of AAVE, taken from CoinMarketCap:
copy-paste the token contract address from CMC
Paste that into the “search name or paste address” field on Deswap:
paste the token contract address into the field
As you can see on the above screenshot, the token contract address correctly matches AAVE from the list itself.

You always need to double-check the token contract address before you trade, especially when it comes to less popular altcoins because there are a lot of fake tokens out there. The best way to verify a token contract address is to go to the official website or community group of the project itself and see all their official announcements (they always have their token contract address in one of the announcements).

Step 3 - Manage Your Position Size and Risk Accordingly

This is perhaps more of a trading advice than a precaution step. It has to be said that many traders out there are almost always overleveraged and end up losing a large amount of money.

You see, many DEX traders use DEX-es because they want to swap mid-cap and low-cap altcoins easily. Many of the less famous altcoins are not available on the biggest centralized exchanges like Binance or FTX. They are, however, almost always available on DEX-es. 

Many newer projects release their tokens on DEX-es right from the very beginning. If you plan to buy mid-cap and low-cap cryptocurrencies from DEX platforms, you must always be very careful with your position size. 

In the best-case scenario, you might find very good winners in a very short period of time. Some lower cap coins can make you hundreds of percent ROI when you make the right trade. However, they can also make you lose a lot of money in a matter of days or even hours.

Always use smaller position sizes, and don’t trust hyped altcoins way too much. Remember that the risk is always bigger with lesser-known cryptocurrencies.

Step 4 - Manage Your Slippage and Gas Fees

Last but not least, you must make sure you change the slippage and gas fee settings before you make the swap. Click the settings icon right to the text Swap and Liquidity. Check the red box below:
paste the token contract address into the field
You will see the Settings modal. That is where you can change the gas fees and slippage tolerance.

The default settings usually work out of the box but not always. If you attempt to trade lesser-known altcoins, sometimes you need bigger slippage tolerance (such as 10% or 15%). Always consult with the project official telegram or discord group and ask their admins what would be the ideal slippage.

Keep in mind that you should not put higher slippage tolerance when it’s not needed. Nobody wants to get a bad price when they buy a new cryptocurrency. Everybody always wants to get the ideal price whenever possible.

Time to Buy Crypto on Decentralized Exchanges- Make the Trade

Now you have gained more knowledge about all the important steps before you buy crypto on decentralized exchanges. It’s time to put your effort into actual trade!

Just like how we’ve explained above, go to DeSwap and connect your crypto wallet app to the page. Select the token you want to trade from and to, and make sure you put the right number for slippage tolerance and gas fee. Click the Swap button to proceed.

When you already understand how the entire process works on DeSwap, you will basically be able to replicate all the steps with almost all other decentralized exchanges. Most other DEX-es have the exact same basic mechanism, although some of the features might differ from one to another.
Did you like this article?