How Does Binance Liquid Swap Work

Binance, one of the largest exchanges in the world, recently came out with Binance Liquid Swap, a liquidity pool that uses principles from the Automated Market Maker model. Through this, one can trade tokens from …

Binance, one of the largest exchanges in the world, recently came out with Binance Liquid Swap, a liquidity pool that uses principles from the Automated Market Maker model. Through this, one can trade tokens from pools right away and get rewards.

In a general context, a swap means the exchanging of one financial instrument for another. The action is undertaken at a predetermined time, as mentioned in the contract. In the world of cryptocurrency, users take part in crypto-financial products for swapping. Binance launched its Liquid Swap to allow users to become liquidity providers or use swaps easily. This comes along with the advantage of not giving to worry over high blockchain fees or the creation of complex DeFi wallets. On account of its easy-to-use interface and the opportunity it provides to farm BNB (Binance Coin), Binance Liquid Swap has witnessed tremendous growth. 

Users, with their tokens/local currency, can make use of the swap function to buy and sell crypto tokens. How this works is there are two tokens in each pool. The price between them is decided by the relative amount of tokens. And as long as there are corresponding tokens in the pool, their trading is possible. This has been covered more in detail below. But before proceeding, let us quickly understand what Binance does.

About Binance:

Established in 2017, Binance is one of the major cryptocurrency exchanges. According to the company’s website, the platform records 2.0 billion average daily volume and over 1,400,000 transactions every second. Binance, renowned for crypto-to-crypto trading, has one of the lowest transaction fees for crypto exchanges.

In 2020, the exchange introduced Liquid Swap, a liquidity pool platform where tokens can be traded from pools. And thanks to the many benefits of liquid swap (which you will see below) the platform has experienced strong growth. 

A Guide To Binance Liquid Swap

  • By selecting the ‘Add’ tab, you can add liquidity quickly. You have to select which token to deposit and which pool to deposit it on. The Redeem button, on the other hand, allows you to withdraw your tokens from the liquidity pools.
  • Choose a pool of liquid trading pairs and deposit a sum into the pool. The amount will be converted by the system into 2 tokens. This will be as per the price ratio of the current trading pair pool. The liquidity pool will be filled with an amount of the pool portion. After adding, you can remove the pool portion any time. The removed pool portion would be saved.
  • The tokens that are added get a share of fee income from the pool transaction. Meanwhile, the added tokens will get BNB yield farming rewards. It must be noted that should the token’s price shift wildly in the market, the holder of portions in the pool may not see the same profit in value. Thus, it is not risk-free guarantee and does not create principal secured gain.
  • On an hourly basis, yield-farming and trading fee rewards get updated. One can click Claim to claim the tokens to the spot wallet. 
  • If you want to get a portion after a token is added to the pool, you can remove the same token pool portion. This can be done in a single token or on proportional tokens. A deduction will be made in the form of transaction fee. This will be from the sum available while removing a token to trade it to another in the pool, on a proportional basis.

Benefits Of Liquid Swap

Listed below are some of the benefits of liquid swap: 

  1. Using the Binance Liquid Swap is simple and can be done in a few clicks. Not only can you transfer funds to your preferred liquidity pool, you can use the swap function to see your earnings and withdraw your fund in just a few clicks.
  2. The platform has a wide roster of liquidity pools, like BNB, BTC, stablecoins, and altcoins. Users can choose from an array of liquidity pools, with at least $1 million in liquidity. 
  3. A low fee is another one of the primary benefits of liquid swap. 
  4. Cyber security specialists are assigned to look over the funds circulating in Binance Liquid Swap. The platform is also covered by the Secure Asset Fund for Users. The SAFU protects users and their funds in extreme instances and functions like insurance. 
  5. By providing liquidity to the pools, you can earn trading fees. Not only that, you can receive bonus BNB tokens.
  6. The fact that it is part of the bigger Binance ecosystem is another one of the benefits of liquid swap.

Source: Binance

How To Earn With Liquid Swap

You can generate passive income by becoming a liquidity provider. To provide liquidity, you will need to add assets to the pool. In exchange, you will receive transaction fees and flexible interest. This will depend on the selected pool’s specifics and added assets. 

You can select from two types of Liquid Swap pools:

1. Stable – The fluctuation in the exchange rate or token price has a slight impact on the price of the pair in the pool. A hybrid constant function AMM system is offered under this type. It realizes the transaction and pricing between the stablecoins and has low slippage. As a result, this type offers lower exchange rate/price fluctuations, providing a more reliable and stable market-maker income. However, the earnings potential is comparatively lower.

2. Innovative – The price of the pair in the pool is impacted to a large extent by the exchange rate or token price fluctuations. The rate of return swings significantly. This type is created with a constant mean value AMM system. It realizes the transaction and pricing for 2 tokens or fiat currencies or a mix of the two. This type has greater exchange rate/price fluctuations, which in turn translates to more volatility risk. However, this also means there is the possibility of better earnings. 

What are Binance liquid swap risks?

Binance Liquid Swap depends on a pool of liquidity. There are two tokens in each pool. The general measure of tokens decides their cost and can constantly be exchanged for however long related tokens are in the pool. Binance Liquid Swap offers more steady costs and lower charges for massive exchanges. From the Binance landing page, it’s not difficult to get everything rolling with Binance Liquid Swap with a button press. All activities, from moving assets to your liquidity pool of decision. After utilising the trading capability to see your profit and pull out your assets, just take a few snaps. 

  • Binance Liquid Swap is protected and simple to utilize. It’s not unadulterated DeFi. Be that as it may, it’s an extraordinary way for noobs to figure out how trading and marking work in an okay climate. Once OK with the cycle, they could securely branch out into the crazy universe of DeFi.
  • The AMM calculation rebalances the pool’s tokens severely, predefined way. Should the worth of one symbolic change fundamentally, the AMM will redress. Your portion of the pool could contain various extents of the tokens to when you marked. “Fleeting Loss” is the open door cost of keeping your tokens. Your dollar worth could continue as before. In any case, you could have had more tokens. The misfortune feels extremely long-lasting when it works out. 
  • The dangers of temporary misfortune and slippage are infuriating, yet they’re gambles with normal to practically all liquidity pools. The ‘slippage’ alludes to the adjustment of the conversion standard achieved by your exchange. For more modest sums, the slippage stays low. However, on the off chance that you attempt to purchase a lot, you might wind up mutilating the pool and paying something else for your tokens.

Swap Farming

Sometime back, Binance came out with an innovative way for users to swap and trade their coins – Swap Farming. Through this, users could swap tokens and get up to 50% fee rebates in the Initial Farming Period. 

Binance Swap Farming uses the AMM model to help swap crypto pairs from a pool of coins and tokens. Pairs of tokens get pooled together. The price of each token is determined on the basis of its ratio.

To participate in Swap Farming, here are the steps a user needs to undertake:

  1. Go to the official website of Binance and login to your account. Under the Trade tab, click on Swap Farming. You will then come to the Swap Farming page.
  2. Select the token pair you would like to swap. Enter the figure you want to swap and confirm the details. The fees and slippage will get calculated. 
  3. To proceed, click on Swap. 

Once you have placed orders on eligible swap pairs, you can claim Swap Farming Rewards. After you enter the Binance Swap Farming page, you need to click on Claim Rewards. The rewards will get distributed to your spot wallet.

It must be noted that the rewards are calculated on the basis of your order’s swap rate. The transaction fee rebate shall be swapped to BNB and finally credited to your Spot Wallet.

Source: Binance


While it is easy to use, Binance Liquid Swap may be recommended for advanced traders or those users who have been familiar with the world of crypto for a while. The benefits of liquid swap is that it gives you trading fees, interest income and liquidity rewards. Before you proceed, please note that adding funds to a liquidity pool comes with some risks. The token distribution you get on removal could differ from your initial input. While adding or removing funds, you may have to bear certain fees. 

(Note – The details contained in this article have been sourced from the official website of Binance.)


What is liquid swap Binance?

It is a DEX and yield farming app that is developed on the Binance CEX. Binance Liquid Swap has liquidity pools that are funded by those with asset management needs. Swap traders looking to buy/sell crypto use this platform.

Is liquid swap a guaranteed investment?

No. The earnings through liquid swap are not guaranteed.

What is slippage?

Slippage refers to the difference between an order’s expected price (when a market order is placed) and the price when it is executed. The percentage gives users an idea on how much a specific asset’s price has moved. As a result of the volatility in cryptocurrency, an asset’s price can change often, on the basis of trade volume and activity.

Is liquid swap profitable?

Yes, it can be. Many users benefit from the low fees, an array of supported assets, and instant transactions, all the while generating passive income on their assets.

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