Exchanging one crypto token for another is called a token swap. A token swap refers to exchanging crypto assets between two blockchain networks.
A token swap is not only performed by crypto investors or traders who wish to switch between dApps and ecosystems but could also be undertaken by developers of crypto projects. For instance, when a project migrates to a new blockchain network, it performs a token swap to exchange its native token for another one that works on the blockchain it will now operate on.
Token swaps differ from exchanges that allow the trading of crypto assets, especially since there is a fixed rate for such an operation. In trading, the value of the assets keeps fluctuating depending on market conditions. However, in token swaps, the value is maintained - offering no profit or loss to users operating.
Atomic swaps are a type of token swap function which allows users to exchange tokens from different blockchain networks using smart contracts. The smart contract contains the swap’s terms and conditions and successfully processes the transaction once the seller and buyer agree on the conditions.