Disclaimer: This article was written after significant investigation of the SwapSpace service. However, the service was never used by the author. All information provided should be viewed as the perspective of a crypto enthusiast and not that of an expert on the SwapSpace platform.
When researching a project in the crypto space, I find it most helpful to first uncover what makes the project unique. This is often difficult when researching cryptocurrency exchange products. A wide variety of centralized exchange (CEX) and decentralized exchange (DEX) products exist, and many have their own unique quirks and features.
This is especially prevalent within DEX-focused projects where lending/borrowing, yield farming, multilayer interest incentives, and other decentralized finance (DeFi) protocols are used to set a project apart from its competitors. In the CEX space, product focus is less about innovative DeFi recreations of complicated financial procedures and more about accessibility, number of supported currencies, fees, and other incentives. These features are also important in the DEX space, however the familiarity (similarity to a bank) and intuitive UI of a CEX product like COINBASE is going to be a major draw for consumers (despite the outcry of crypto enthusiasts who will relentlessly proclaim, “not your keys, not your coins”).
One positive aspect of CEX services is the ability to convert cryptocurrencies across blockchains in a way that is impossible for most DEX services. For example, many of the major DEX services exist as part of the Ethereum ecosystem. It is possible to exchange ERC20 tokens on these exchanges, but an exchange between Bitcoin and Ethereum is impossible in most cases. Most exchanges include an ERC20 token that is equivalent in value to Bitcoin (like Wrapped Bitcoin / WBTC) to remedy this issue. However, if you wanted to buy something using Bitcoin, any Ethereum held by a user could not be directly converted to Bitcoin on the popular DEX services. The ability to transfer between many different kinds of cryptocurrencies is an aspect of CEXs that is important to keep in mind given the subject matter of this article.
When faced with multiple possibilities, it is reasonable to ask, “What if I only care about the exchange rate?” This is where exchange aggregators become important. SwapSpace is an aggregator of centralized exchanges with a focus on instantly providing exchange rates and other exchange information. Users can then choose which exchange to use based on the information provided.
Two aspects of this project are fascinating to me. First, the “exchange partners” used in this service allow for registration-free exchange of tokens. This is accomplished via direct exchange between crypto wallets. As such, users must be acclimated enough to cryptocurrency that they have created a crypto wallet (or have the desire to do so). However, the upside is that there is no need to worry about the “not your keys…” problem. Second, the business model of SwapSpace adds no additional fees for users. Instead, SwapSpace shares in the commissions of the exchange providers. I think that this is a clever business model.
In addition to instantly providing exchange rates to users, other useful information such as a 5-star rating system as well as “floating rate” or “fixed rate” designation are provided for each exchange partner. This latter piece of information is extremely beneficial to users because “fixed rate” exchange partners will freeze the exchange rate for a period of time so that users can complete the transfer without falling victim to unexpected rate fluctuations.
A final positive aspect of SwapSpace that I’d like to emphasize is great UI. The user interface is extremely important for an exchange service because unintuitive design can lead to confusion, which is far more detrimental for a financial product than it may be for other software applications. From the exchange application itself to the blog section of the website, SwapSpace is a clean, well-designed product. While great UI cannot make a product successful on its own, the care and passion of SwapSpace’s creators is incredibly apparent in the site’s design.
Having emphasized everything I like about this product, it’s time to discuss my reservations. The most prominent issue I have with this service is the exchange method used by SwapSpace’s exchange partners. That is, the design of this service is to: First, select a pair of tokens and as well as the amount to be exchange. Then, provide a wallet address for the tokens the user will receive from the transaction. And finally, transfer the trade input to a wallet provided by the exchange partner. It is this last step that is extremely troubling to me. Since the service is registration-free, the user does not hold an account with any of the exchange partners and is making the initial transfer to an exchange partner’s wallet on good faith. It is notable that many top exchange partners provide extensive terms and conditions and plenty of information regarding the trade process. However, I would be hesitant to transfer funds directly to an exchange partner’s wallet without doing more research into the individual services (thus negating some of the time SwapSpace has saved me by aggregating information about them).
Another reservation I have about the trade service is lack of transparency regarding fees and transfer times. Fees and transaction speed are two major points of competition for both CEX and DEX products. Through my limited investigation of the application, it is unclear whether fees have already been subtracted from exchange rates or not. I suspect that they have not, but to be certain of the fee structure, I would require more investigation as well as test use of the product. For many crypto enthusiasts, this may be expected. However, estimated fees and fee transparency is a major positive aspect for me when I consider exchange services. Additionally, the SwapSpace FAQ indicates that “usually transactions take from 5 to 60 minutes…”. This is yet another aspect of SwapSpace’s exchange partners that I view as a downside. Long transaction times would make me anxious, especially after directly transferring funds to an exchange partner and having to wait for a return deposit in my account. It should be noted that SwapSpace advertises a “Swap Tracker” as well as 24/7 customer support to help remedy this situation.
In summary, SwapSpace in an incredibly well-designed product which fulfills exchange aggregation needs within the crypto space. There are many positive aspects of this product. Since CEX exchanges are used, it is possible to convert directly between Bitcoin and Ethereum as well as other token pairs that cannot be traded on most DEXs. Since there are no additional fees on top of the exchange partner fees, users are encouraged to trade through the SwapSpace service instead of looking up exchange rates and running to exchange partners directly. Finally, intuitive UI, “fixed rate” exchange partners, and registration-free ease of access round out the many positive aspects of this application. Several reservations were also highlighted, however it should be noted that the same reservations are prevalent throughout the entire cryptocurrency space. Transparent guarantees of payment, transaction speeds and fees are something that all financial products should strive for. And, while I would absolutely use this service, I would be cautious and send a few test transactions across the service before exchanging any larger amounts.
