How does Zwaply calculate the exchange rate?
Cryptocurrencies are extremely volatile, so much so it could drop 10% in a matter of minutes. Then, how does Zwaply deal with that?
It’s difficult, but we decided to keep the quoted rate for a few minutes (we’re not disclosing the exact time) so users can have the time to submit their crypto.
At the moment we get a request for an exchange, we ping several suppliers to get our customers the best rate available in the market at that exact moment.
In the case of a delay getting the funds, the amount of crypto you’ll get will change, unfortunately. That’s why we clearly mention that the value is ‘approx’ and ‘the final amount may vary’.
The difference shouldn’t be more than 1%, but it could eventually be higher than that. Unfortunately, that’s totally out of our control because transactions generally take 5-15 minutes to complete, from the time we get the funds to the moment our client gets the funds in the wallet.
During that time, coins could go higher, lower, or stay the same. If they go up, obviously our clients aren’t going to complain, but the chances are about the same in either case.
Basically, the difference could go in a positive or negative direction. In all cases, we guarantee our customers the best rate at the exact moment the exchange happens.
You have to consider the network fees in the mix, which adds more complexity to the transaction. At Zwaply we aim at simplifying the process of owning crypto currencies for everybody. And by doing so, and also aiming at making it super fast and easy to transact, the trade off is some slight differences in the final amounts our customers get. If that difference becomes higher than $25 UD dollars, then that’s a different story.
Also, bear in mind that when you’re trying to do a three way exchange, that’s even more complicated to execute. It’s easier to understand with an example. Let’s say you want to exchange Litecoin to Decentraland (MANA). Actually there is no trading pair ltc/mana, so we have to exchange your Litecoin to Bitcoin, and then take those Bitcoins into MANA. See? Things get a bit complicated in the background. Don’t worry, we do all the heavy lifting for you so you can be done in 10 seconds.
In the future, crypto currencies will become more stable, less volatile, and we’re looking forward to that day.