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How to Use a Decentralized Exchange on Solana

How to Use a Decentralized Exchange on Solana

Published on 2022-12-022 min read

Raydium is an Automated market maker(AMM) decentralized exchange (DEX) platform built on Solana, that allows digital assets to be traded automatically using liquidity pools instead of the traditional market exchange system.

Raydium offers fast and cheaper transactions compared to other decentralized exchange platforms. This article will take you through a step-by-step process on how to trade tokens on Raydium.

1. Download a Solana Wallet

Phantom is the most used Solana wallet, and it's the wallet this tutorial uses to trade tokens on Raydium.

  1. Go to Phantom

  2. Download and install Phantom as a browser extension (Chrome, firefox, brave, and edge)

  3. Create a new wallet and note down your secret recovery phrase

Note: never share your recovery phrase with anyone because losing it means losing access to all your funds.

Phantom Solana Wallet

2. Fund your Solana Wallet

  1. Open your wallet and click the dropdown button

  2. Copy your wallet address

  3. Go to your favorite crypto exchange platform (e.g Coinbase)

  4. Buy Solana and any other Solana ecosystem tokens you want to trade

  5. Withdraw them to your Phantom wallet address

Note: make sure the exchange supports Solana token withdraws. Some exchanges allow buying and selling Solana tokens, but do not offer withdraw functionality.

3. Connect your Wallet

  1. Go to Raydium

  2. Click on the "Launch App" button to access the DEX interface

  3. Click on the "Connect" button to connect your wallet

  4. Select Phantom

  5. Allow Raydium to access your wallet

  6. Click on connect

Connect wallet to Raydium

4. Select the Assets you Want to Trade

  1. Select the desired token you wish to swap from (e.g. SOL)

  2. Select the token you wish to swap to (E.g. USDC)

  3. Specify the amount of tokens you want to swap

Select the Assets you Want to Trade

Once you choose the amount of tokens you want to swap, the amount of tokens you will receive of your new token will automatically be calculated.

a. Confirm your Swap Settings

Before you confirm your transaction, it is a good decision to check the info section to understand more details about the transaction. These trade settings become more important for large transactions.

Here are explanations of the swap settings:

  • Minimum Received - the minimum amount of tokens you will receive from the trade

  • Slippage Tolerance -the difference between your estimated price and the execution price

  • Price Impact - the difference between market price and estimated price (the impact is larger for large trades)

Confirm swap settings

If prices are volatile, transactions with low slippage might not get confirmed. However, if slippage tolerance is high, you may receive less tokens for your swap because the market price changed between your original estimate and the price during trade execution.

5. Swap Tokens on Raydium

Now that your settings are reviewed, it's time to submit the transaction.

  1. Click on the Swap button

  2. Click the transaction link to view it on a Solana block explorer like Solscan

  3. Confrim your assets were swapped once the transaction is confirmed on the blockchain

Note: the swap button only shows up when you have a sufficient balance to process the transaction, and it might take a few seconds to be confirmed.

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