Filipinos use a lot of crypto exchanges, from centralized platforms to decentralized exchanges like Uniswap or Aave. Axie Infinity players and managers are familiar with the Ronin sidechain, where users can buy and sell Axies, and store WETH, SLP, and AXS.
With the release of Katana, the decentralized exchange within Ronin, users will be able to swap around these assets, including USDC, with each other. In this article, we’ll explore what Katana is, and the activities you can do in this Ronin exclusive decentralized exchange.
What is a Decentralized Exchange?
This type of exchange allows anyone to exchange between assets without a third party facilitating the transaction. This is done via smart contracts. This also means that the participants and users of the decentralized exchange themselves are providing the assets via liquidity pools. (More on this later.)
What is Katana Dex?
The first automated market maker (AMM) dex inside Ronin, users can swap between available tokens inside Ronin without needing to go out of Ronin.
Why is this important? Remember that players earn SLP when they win battles. If you want to buy another Axie and you only have SLP, you need to take SLP out of Ronin and transfer it to main Ethereum network to convert it to ETH, then transfer it back to Ronin. This is a four-step process and there are multitudes of transaction fees to pay. By the time your ETH reaches back to your Ronin, the 1ETH worth of SLP you have is just 0.8 ETH.
With Katana, you do the entire swapping inside Ronin, without even going out.
Aside from swapping, you can join liquidity pools and farm tokens, which are activities available in other decentralized exchanges. If you don’t understand what liquidity pool and farming are, we’ll explain eventually as you read along this article.
What Assets are Available on Katana Decentralized Exchange?
These are the following tokens available right now on Katana Dex:
- SLP – Smooth Love Potion. Players earn SLP when they win battles in Axie Infinity. SLP is required for breeding (creating new Axies).
- AXS – Axie Infinity Shards, the governance token of Axie Infinity.
- WETH – Wrapped Ethereum, this is the ERC20 equivalent of Ether (ETH).
- USDC – a stable coin that is 1 = 1 to the US Dollar.
What are the trading pairs in Katana?
The following trading pairs are supported.
- RON/ETH (not available at the time this article was written.)
What is RON Token?
This is the token to be used to pay fees in Katana and secure the Axie Infinity network. Ron is not for sale but liquidity providers can begin farming this today.
What is a Liquidity Pool?
This is the pool of funds locked within the smart contract. Anyone can add funds to it to ensure that there is enough for others who are trying to swap. These people who add funds to the pool are called Liquidity Providers (LP) and they will receive rewards in the form of fees for their contributions to the pool.
How to Start Using Katana
2) Connect to the Katana Dex.
The Dex is at https://katana.roninchain.com. You will arrive at this page:
3) Click “Connect Ronin Wallet” and you will be asked to agree to the app’s Terms of Service.
1. What your wallet contains and your address
2. Menu (Swap)
3. The Swap Page
4. The asset to swap
5. The asset to swap for
6. Pool, Farm, Analytics, Docs, which are their own pages.
You can also disconnect your Ronin when you are not using Katana.
How to Approve Tokens and Transactions in Katana
Before you can do anything with your assets using Katana, you first need to “approve” (permit) Katana to do that. It will ask for permission each time for each token but won’t ask again. Just click “Approve” when prompted.
How to Swap Tokens in Katana?
When you swap tokens, you exchange one token for another. As an automated market maker (AMM), Katana Dex will always have assets available for swapping. Take a look at the image below:
1. This is the asset you will swap
2. This is the asset you want to obtain.
Steps to Swap Tokens in Katana
- Indicate how much token you want to swap.
- In the above example, you can fill in the AXS field or the WETH field, the other field will populate depending on the current exchange rate between the tokens.
- Swap! A confirmation will pop up, just click “Confirm Swap”.
Note that you may need to “Approve” Katana to do something with the token you are trying to swap!
Parts of a Katana Transaction
(Sorry if the image says “insufficient funds.” All may assets are either in staking or in liquidity pools, things that I will explain later. Suffice to say, if you have insufficient funds, the transaction will not go through!)
- Liquidity Provider Fee (People who made the WETH/AXS Trading Pair Possible, which are the “liquidity providers” will divide amongst themselves this fee.)
- Route: How did the WETH become AXS? There could be two routes:
- Asset A to Asset B
- Asset A to Asset C to Asset B
- Price Impact: How much are you going to affect the price if your transaction pushes through.
- Minimum Receive: The minimum amount of token you will receive depending on the slippage tolerance.
- Slippage tolerance: The price of the tokens between each other is not static, it changes even during the transaction. Depending on the slippage tolerance rate, the transaction could push through or not.
Read Part 2: Ron Token Axie Infinity Guide | How to Farm and Earn Ron with SLP, AXS, WETH, Stake, Add Liquidity Pool on Ronin
This article is published on BitPinas: How to Use Axie Infinity’s Katana Dex and Swap AXS, SLP, ETH, USDC in Ronin Sidechain | Philippines Guide