Token swaps made via decentralized exchanges are heavily affected by slippage, so that users do not receive a fair price for their tokens.
P2P Safe Swap enables users to execute simultaneous, passcode-protected peer-to-peer swaps, without risk of mistakes. As a result, they are able to set their own prices, avoiding the slippage characteristic of exchange venues.
Slippage is the difference between a token’s market price and the price at execution. Slippage on DEXs is high because trades are funded by pools. Depositing and withdrawing alters the balance of a pool - for example, trading 100 ETH for token n drives the price of token up, so the user gets fewer ns than they should. This also means that the larger the trade, the higher the slippage.
How it works
The user enters the parameters of the trade - both tokens, the desired price of both sides of the transfer, the address, and the password. They then select create swap.
The second party reviews the transaction and enters the password. The smart contract collects from both wallets and deposits them in the other simultaneously.
As with the Undo Button, the initiator of the swap can cancel and retrieve their funds until the second party has entered the correct password, and the password is communicated independently of the system. The first party can cancel the transaction at any time until the second party enters the correct passcode and signs the transaction.