How Swaps Work

A swap is how users on a blockchain trade one token for another. A straight token to token trade without the use of leverage is called a spot swap/trade as the underlying token is the one being traded.

In DeFi, a user signs a transaction through their wallet for their trade to execute on the desired platform. This transaction propagates throughout the entire blockchain worldwide and after a short delay, the trade is confirmed and you have the results of your trade in your wallet. An advantage here is that the funds are transferred immediately without waiting for the lag time that is present in traditional markets. In addition, Solana does this at very low costs (sub cent), thus making it more efficient than many money transmitting networks, especially internationally.