# Exchange

## Introduction

Yuzuswap facilitates seamless swaps on Movement, allowing users to trade tokens in a straightforward and permissionless manner. This guide explains the key aspects of swapping tokens using the Yuzuswap protocol.

## Understanding Swaps on Yuzu

### Basic Swap Mechanism

* **Process**: Users select a token they own and a token they wish to acquire.
* **Execution**: The swap sells owned tokens for the desired tokens, minus the swap fee (awarded to liquidity providers).

### Protocol vs. Web Interface

**Note**: Swapping via web interfaces may introduce additional permission structures and differ in execution behavior from using the Yuzu protocol directly.

### Automated Market Maker (AMM) Model

Swaps on Yuzu are executed against a pool of liquidity, not on a first-in-first-out basis like traditional order book trades.

Liquidity providers earn fees proportional to their capital commitment. Learn more about Fees on Yuzu (link coming).

## Key Considerations in Swapping

### Price Impact

#### **Definition**

Price impact is the change in execution price due to the size of the market order against available liquidity.

#### **AMM Dynamics**

The relative value of assets shifts continuously during a swap, affecting the final execution price.

#### **Liquidity and Price Impact**

The amount of liquidity at different price points influences the price impact. More liquidity equals lower price impact, and vice versa.

#### **Interface Display**

The Yuzu interface provides real-time estimates of price impact and warnings for unusually high impacts.

### Slippage

#### **Definition**

Slippage refers to price changes that occur while a transaction is pending.

#### **Gas Fee and Execution Order**

The amount of gas fee influences the transaction's execution speed. Lower gas fees can lead to longer pending times and potential price changes.

#### **Slippage Tolerance**

Users set a slippage range within which the transaction will execute. Transactions fail if the execution price falls outside this range.

### Additional Token Fees

Some tokens on Yuzuswap may have additional fees. Transactions may fail if the slippage is set too low to cover:

* Price Impact Percentage
* Individual Token Fees (for both X and Y tokens)
* Network Gas Fees

## Safety Checks in the Yuzuswap Protocol

### Common Safety Measures

* **Expired Transaction**: Cancels a swap pending longer than a predetermined deadline to avoid price changes over extended periods.
* **INSUFFICIENT\_OUTPUT\_AMOUNT**: Protects against drastic unfavorable price changes. If the output amount deviates significantly from the estimated amount (beyond slippage tolerance), the swap is canceled.

## Conclusion

By understanding price impact, slippage, and Yuzuswap’s safety checks, users can effectively navigate the swapping process. Remember to account for additional fees and network conditions to ensure successful transactions.

## Support and Assistance

Need help with launching or migrating your token to Yuzu? Connect with us on Twitter or Telegram for assistance.

***

1. Proportional in this instance takes into account many factors, including the relative price of one token in terms of the other, slippage, price impact and other factors related to the open and adversarial nature of Movement. ↩
2. For information about liquidity provision, see the liquidity user guide. ↩
3. The Yuzu interface informs the user about the circumstances of their swap, but it is not guaranteed.↩


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