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If you play Alien Worlds, R-planet, or any of the other games based on the WAX blockchain, then understanding how to use Alcor Dex is essential. Alcor Dex allows you to trade in-game crypto such as TLM or Aether for more mainstream cryptos such as WAXP or USDT. Alcor also allows you to increase your crypto earnings by providing to liquidity pools and earning trading fees. In this post, I'll show you what you need to know so that you can get the most out of Alcor.
Simple Swap
One of the most basic features of any DEX is the ability to swap from one token to another, and Alcor makes this easy. After connecting your WAX wallet, simply select the "Swap" tab from the top menu and you will be taken to a screen where you can trade from one crypto to another. Although you can also trade cryptos through the "Markets" tab, the "Swap" tab is a bit easier and offers a more familiar interface for anyone that has used Uniswap or Pancake swap before.
Simply search for the coin you have, the coin you want to trade to, enter the amounts, and confirm the transaction. Liquidity fees are .03% which is more or less the industry standard, and slippage by default is set to 3%. Note: Alcor supports multiple main nets beyond just WAX, so if you can't find a token that you know you have in your wallet, make sure you are on the correct main net by checking the drop down menu up top.
Market Trading
In addition to the more simplistic swapping feature, Alcor also supports the ability to trade using a market system that will seem more familiar to people who have traded on centralized exchanges such as COINBASE Pro. With this feature, you can select from a variety of trading pairs and choose to place either a market order or a limit order. A market order fills your trade more or less instantly at the best available price while a limit order lets you specify the price you want to trade your coins for. Although a limit order gives you more control, your order may never be filled if the going price never reaches your target. In general, I prefer to go with a market order to save time.
Sometimes people get confused, so I'd like to make a quick note. For the Aether and TLM trading pair, we see that we don't have the ability to buy or sell Aether. We only have the ability to buy or sell TLM. Since this is a trading pair, selling TLM necessarily means buying Aether and buying TLM necessarily means selling Aether. This sometimes confuses people, so I wanted to try and avoid any confusion in advance.
Passive Income Through Liquidity Providing
In addition to processing simple trades, Alcor supports earning passive cryptocurrency income through liquidity rewards. The format is similar to providing liquidity on other DEXs like Uniswap, and you will have to provide equal amounts (in value terms) of two separate coins. Simply select the coins you want to provide liquidity for and send them to the trading pool, and you will begin to earn from those trading fees.
When we talk about providing liquidity, there are two key points to be aware of. First, the amount that you earn from providing liquidity depends on a number of factors such as the volume of trades through the pool as well as your share of the pool. On Alcor, a liquidity fee of .03% is split among all the liquidity providers. So, if $1,000 flows through the pool a tot al of $1,000 * .03% = $3 will be distributed to liquidity providers. If your stake in the pool is 10%, you will earn .10 * $3 USD for a total of 30 cents. Obviously, the volume of trades that flow through the pools is MUCH larger than $1,000 per day and those numbers were used simply to make calculations easy.
Second, providing liquidity exposes you to something known as impermanent loss. For a full explanation of impermanent loss, I'd recommend an article dedicated to the topic, but the short explanation is that if the price between the two coins diverges, you can sometimes "loose" profits by providing liquidity instead of simply HODLing in your wallet. This "loss" can occur even if both coins increase in value and you still make a profit. Thus, "loss" doesn't necessarily mean (although it can mean that as well) that your crypto is worth less than what you put in but that you "lost out" vs simply HODLing.
Advanced Features
As a beginner, you will most likely use the simple swapping feature or possibly provide liquidity, but Alcor also has a few other features that are certainly worth mentioning. Alcor provides an OTC (over the counter) method of listing and selling coins. With this feature, you can list a coin at a given price someone can either "take it or leave it" with this offer. If both parties agree to the transaction, it is processed automatically with no third party intervention.
There is also an NFT marketplace where you can buy an sell NFTs. I haven't personally used this feature, but its there for you if you want to check it out. Lastly, there is a "Wallet" tab that reads and displays all the balances from your connected wallet.
Summary
Alcor DEX makes it easy for players of WAX based blockchain games to convert their in-game crypto earnings to other coins and transfer that value created in the game elsewhere. Thanks to Alcor, I can take TLM or Aether that I earn from playing Alien Worlds and R-Planet, convert to WAXP, and then use that to purchase NFTs on Atomic Hub. Without a functioning DEX supporting those in-game cryptos, value would remain siloed in disconnected ecosystems, so I think that Alcor is a great asset to the WAX/EOS ecosystem.
As I was scrolling through the webpage, I also saw that Alcor had plans to introduce support for more chains including BSC, Polkadot, and Ethereum. In general, I see crypto becoming more and more interconnected as different chains start to work together, so I see this as a huge benefit.
As always, thanks for reading and nothing here should be taken as any kind of financial advice.
References
https://docs.alcor.exchange/liquidity-pools/what-is-impermanent-loss
https://alcor.exchange/swap
Image Credits
https://alienworlds.medium.com/trilium-the-groundbreaking-cross-platform-token-underpinning-the-alien-worlds-metaverse-f630d776db23
https://rplanet.io/
