Admittedly decentralized exchanges have clunky interfaces and require improvement before the majority of individuals will feel comfortable using them. However, it's never too early to start experimenting with minor trades. As I outlined in my article Learn to use Decentralized Exchanges, decentralized exchanges eliminate the risk of exchanges running off with your money and also increases your privacy since you give up no personally identifiable information. In addition, they will potentially allow for automatic currency conversion for decentralized frameworks such as SwarmCity or TenX. This article is designed to quickly get you started so the idea of decentralized exchanges are not so mysterious.
MetaMask
The most effective way to use EtherDelta is to interface with the platform using the MetaMask wallet. MetaMask is an extension for your browser. This allows your browser to interface with Ethereum ready websites. Think of it as the old plugins back in the 1990s that allowed you to view videos and pictures in the browser. You will need to use Chrome or the Brave browser to use Metamask. MetaMask allows you to have a single wallet for all of your decentralized apps making access seamless and secure!
After you have installed Metamask click the MetaMask icon in your group of extensions and accept the privacy notice which warns you that it is a beta software and you should take precautions for privacy.
Next, review and agree to terms and conditions.
Then create a password, click accept and then copy down the 12 words on the following screen. Be sure to write the password and the 12 words down!!! If you plan to only use a small amount of funds it is ok saving the seed words as a file because they are password protected. However, for large amounts I recommend that they are written down on a piece of paper and secured in multiple locations. This nearly elinimates any chance of your keys being stolen. Both the password and 12-word seed are required to regain access to your Ethereum wallet.
You will now be taken to your main account screen. Click the drop-down in the top left corner and select “main network”. You can choose to edit the description of your account if you would like. You also have the option to import other private keys using the top right icon with three horizontal lines if they desire. Use this option if you have a spending type Ethereum wallet for small transactions and then you will not need to send any Ethereum to your new wallet.
EtherDelta
Now you are ready to start using EtherDelta. Go to etherdelta.com. When you arrive you should already be logged in and ready to use the app. If you are shown to be logged out then you may need to unlock your MetaMask extension by clicking on the MetaMask icon and entering your MetaMask password.
On the main EtherDelta screen, you will see 8 windows. Going from the top left to the right you can see your balances, order book, price chart, trades, volume, new order form, my transactions and updates.
Selecting a Trading Pair
To select a trading pair, click the letters that have a down arrow on the right side of them. This is located in the top left corner next to the EtherDelta logo. in the
Balance Window
The balance window shows your current deposits, withdraw and transfer options. Deposit allows you to deposit funds into the EtherDelta smart contract, this act is like depositing funds into a centralized exchange. You will need to deposit funds to the smart contract to be able to trade. Withdraw allows you to remove your funds from the smart contract. The transfer option is the same as the send option in any other Ethereum wallet, you can use this form to send your tokens to any other Ethereum address.
Below the Deposit, Withdraw and Transfer options you can see headings for Token, Wallet, and EtherDelta. Below this heading, you will see your currently selected tokens for each trading pair. In this example, I have selected the Veritasium/Ethereum pair. Under the wallet heading, you will see the current total of tokens in your wallet. Then under the EtherDelta heading, you can see how many tokens you have currently in the EtherDelta smart contract.
In order to trade, you must deposit tokens into the EtherDelta smart contract. This smart contract ensures you are the only one to have access to your funds even after you deposit them into EtherDelta. The only way these funds are released is if you agree to a trade or you withdraw the funds from the smart contract. This is the fundamental mechanism that eliminates the counterparty risk.
Get Ready to Trade, Deposit Funds
To deposit funds, enter the amount you would like to deposit on the Deposit form in the balance window. For this example, I deposited 1 ETH. I entered 1 under the ETH section field and clicked deposit. After you hit deposit MetaMask will popup and ask that you either "reset", "submit" or "reject" the request. Click submit to confirm the transfer. If you change your mind click "reject". If you make any alterations to the MetaMask field such as changing the gas limit or gas price you can click reset to return the transaction to its original state.
After you click submit you will need to wait for the transaction to confirm. This can take 1-5 minutes based on the state of the network.
Sometimes the EtherDelta application will need to be refreshed to show the latest status of your deposit. Refresh your browser if you are not seeing any updates. In rare cases transactions are not picked up by the network due to low gas price or limit. If this happens don't worry!! It means that your funds never left your wallet and you will need to accomplish the transaction again.
Once your funds show up under the EtherDelta heading in your balance window you are ready to trade. To setup a trade, use the “New Order” window. Select "Buy" or "Sell" depending on what you want to do. The first field will show the trading token you selected, in this case it was VERI. Enter the amount of tokens you would like to buy. The TOKEN/ETH field is the price at which you are willing to buy or sell your token. The third field ETH will auto-populate with the calculated total and the “expires” field lets you set how long your trade request will stay posted on the exchange. The default is 10000 blocks. At ~3 seconds a block, this is roughly 8 hours. You can change this if you want your trade request to be valid or more or less time.
When you click the “Buy” or “Sell” button your MetaMask confirmation will popup asking you to confirm or reject the transaction. Once you Confirm the transaction you will need to let the transaction confirm after your trade is posted. When the trade is complete you will see the trade completed in the “my transactions” window. Remember, sometimes transactions do not confirm and it just means that you will have to accomplish the trade; your funds are never at risk when this occurs.
There you have it. I use EtherDelta for all Ethereum token based trades and have never lost money using the platform. I recommend it highly as this way I can leave my funds on the exchange and not worry about the exchange going under and taking my money. When you factor in security and privacy this is no doubt the most secure, quickest and private way to trade.