Decentralized cryptocurrency trading is the future, and the first exchange to take an initial jab at it is Etherdelta. Etherdelta is an Ethereum-based exchange, and is known for it's wide assortment and early listing of (ERC20) crypto's. Many people are having difficulties trading on this exchange, and for those I have made this guide.
Why trade on Etherdelta?
- Etherdelta is known for usually being the first exchange to list new cryptocurrencies, and as such it is a great place to pick up crypto's before they hit major exchanges
- Etherdelta has no KYC and as such offers some degree of privacy
- Etherdelta offers peer-to-peer trading which means your funds never leave your control, and as such hackers cannot hack Etherdelta and steal your exchanges (like Mt.Gox)
- Etherdelta can be cheaper in terms of trading costs
- Trading costs on Etherdelta are paid, in large part, to the miners of Ethereum. By using Etherdelta, you are are rewarding miners and using the Ethereum blockchain the way it was intended
- Logging onto Etherdelta with a Ledger hardware wallet is easy as pie.. no passwords, captcha's or 2FA. It automatically recognizes your wallet/account.
- Vitalik approves!
Why NOT trade on Etherdelta?
- Your funds and private keys are your own responsibility: if you don't protect them properly you are at risk of losing everything
- Etherdelta has a steep learning curve, and some actions may turn out to be more expensive than you anticipated
- Etherdelta is SLOW SLOW SLOW unless you pay premium to get orders to go through quicker
- Etherdelta has a mediocre UI and works a bit clunky
- Etherdelta has low liquidity, which means it can take a long time to have your buy/sell orders filled
- Etherdelta does NOT have order matching. This means if you create a buy order for CoinX at 0.05 ETH and somebody else makes a sell order for CoinX at 0.05 ETH, the one does NOT automatically fill the other.
- Don't trade here if you are a n00b. No offence, but if you are not 'tech savvy' then Etherdelta will only frustrate you
Before we continue, I must stress one thing: I do NOT advise trading on Etherdelta if you do not have a Ledger Nano S hardware wallet!!!!
It is very important to realize that there are hackers and scammers rampant. If you connect your software wallet to Etherdelta, and you misclick on the wrong link (maybe somebody pastes something in the chatroom - it happens), you could end up losing all your funds!! I've read multiple reports of this happening. If you own a Ledger Hardware wallet this is not possible and you will be secure!
How does Etherdelta works in general:
Etherdelta is built on top of the Ethereum blockchain. You could say it's one of the first dApps, although it is in some ways a hybrid because it still functions with a website as intermediary. Trading on Etherdelta is different from trading on traditional exchanges. You basically connect your personal wallet to the exchange, after which you transfer funds into the Etherdelta smart contract to put them 'on' the exchange (they are not actually on the exchange, but in the smart contract - should Etherdelta go offline, you can retrieve them from the smart contract; they remain under your control). Once you've deposited funds into the Etherdelta wallet, which is the smart contract, you can then start trading. After a trade, you can withdraw back to your personal wallet.
Everything you do on Etherdelta costs Ethereum gas, expressed in 'gwei'. This is basically the transaction fees you always pay when making Ethereum transactions, if you want a concrete idea of what it is. Different actions have different gas costs, because they are more, or less, complex. Depositing and withdrawing have the lowest gas costs. Gas is spent from the place you used it from. If you are sending from your personal wallet to the etherdelta wallet you will need some ETH in your personal wallet to cover the gas cost. Likewise, if you want to withdraw from the etherdelta wallet to your personal wallet, you must have a small amount of ETH on the etherdelta wallet to cover the gas cost. If you do not have enough gas cost to cover the transactions, funds will not be moved, and whatever gas you did have gets used up in the failure.
The default gas cost is set rather low, 8 gwei. During peak times, when the Ethereum blockchain is clogged up, this can mean that it takes a long time for the blockchain to process the block with your transaction in it. It may take several hours for a transaction to go through if you set the gas cost too low. If you set it higher, it can go within a minute, but you will pay a lot more. Because transactions go through slow at a low gas fee it is entirely possible that you will fail to buy/sell because during the time it took for the order to arrive, somebody else bought/sold it in the meantime. If this happens your funds are returned, but the gas fee is still incurred. Keep this in mind: mistakes cost money on Etherdelta.
You can check how clogged the Ethereum network is by checking this site: https://etherscan.io/chart/pendingtx
My suggestion is to keep the gas cost at 8-10 gwei when load is under 2000tx, and increase it higher (maybe 20gwei) if it's around 5000tx. That should usually get your orders through. Keep in mind that a higher gas cost can add up significantly!!
When you deposit, withdraw or trade, you will be shown a small clickable link on your screen where you can see the transaction on etherscan. Here you will be able to see: How long it takes/took, how much it costs, etc.
Is Etherdelta cheaper?
Yes/No/Maybe/Sometimes/Depends.
It all depends on how you prefer to trade. If you're used to keeping your funds on a centralized exchange, you're probably used to paying 0.25% (Bittrex) or 0.1% (Binance) in trading fees for every trade you make. Thats $0.25 for a $100 trade. Failed trades cost you nothing. The big, 'hidden', fee of centralized exchanges however is the Withdrawal Fee. Bittrex charges a whopping 0.001 BTC ($4-5 at time of writing) to withdraw Bitcoin from them, and 0.005 ETH ($1.5 at time of writing) to withdraw Ethereum. It varies per coin, but the withdrawal fees seriously add up if you are trading in multiple cryptocurrencies.
While people who keep their funds on an exchange won't be faced with withdrawal fees too much, an increasing number of people are concerned with hacks and security of their funds on exchanges. If you are used to withdrawing (and thus paying withdrawal fees) everytime after you make a trade, you will be paying quite a lot on fees all in all. When I got my hardware wallet and withdrew my funds from Bittrex, I was shocked to face about $20 worth of withdrawal fees because I had several cryptocurrencies.
Compare that to Etherdelta. Because of it's different model the majority of costs on Etherdelta are gas costs. Other than gas cost you only pay when you actively click a Buy or Sell Order. This is very important to realize!!! Setting a buy or sell order is FREE, but clicking on them costs you a 0.3% fee. This is the only fee that Etherdelta receives from hosting this platform.
Example: I wanted to buy 20$ worth of tokens, so I deposited this amount of ETH to Etherdelta at 8 gwei. This cost me about $0.08. I then set up a Buy Order and placed my Buy which was free. The next day my order went through, and I retrieved my tokens for another $0.08 to my personal wallet. Very cheap, as you can see in this case.
Example 2: I wanted to buy the same $20 worth of tokens, made my deposits and withdrawals for $0.08, but this time instead of setting my own order I filled one of the existing Sell Orders. This cost me an additional $0.28 to make the buy, plus a 0.3% fee on the tokens.
As you can see, Etherdelta can be cheaper, but also more expensive. Additionally, due to low volume on the exchange there is less volatility also. As a result you may pay a higher (or lower) price than on other exchanges.
STEP BY STEP GUIDE:
TRY SMALL AMOUNTS OF MONEY FIRST
LOTS OF PEOPLE MESS UP AND LOSE MONEY FROM ROOKIE MISTAKES. WITH LOWER AMOUNTS OF MONEY, YOUR MISTAKES WILL BE LESS COSTLY.
Get a Ledger hardware wallet and put your funds in there (ETH or ERC-20 tokens)
Go to https://etherdelta.com
Connect your Ledger wallet with the USB cable to your pc
Enter your Ledger pincode to unlock it
Go to the Ethereum app on your Ledger wallet
Check the settings, ensure that 'Contract Data' and 'Browser Support' are both on. Then select 'Back'.
Refresh Etherdelta. You should now be logged on and your funds will be visible in the Balance screen on the left. If not, click on the top right on 'Account' and select your Ledger
Check Gas cost (!!!) by navigating to the top right of the screen and clicking on your account. At the bottom of the pulldown menu you will find an option for gas price. Set this to a minimum of 8, but if you're doing this for testing purposes and want it speedier set it a little higher. Don't set it higher than 30 because there's no point and it costs a lot.
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Go to the cryptocurrency of your preference by selecting it from the pulldown button at the top left (just right of the Etherdelta logo)
On the Balance screen, make sure you are in the 'Deposit' tab and deposit your funds into Etherdelta by entering the amount in the input field and pressing 'Deposit'. Be sure to have enough ETH in your personal wallet to cover the gas cost. If you are depositing anything else than ETH, be sure to also deposit some ETH because you will need that in order to transfer the funds out of Etherdelta and back into your wallet. After clicking deposit, you must press Confirm on your Ledger hardware wallet in order to sign the transaction. A popup will then appear which will include a link to the etherscan of your transaction - open this to view it's status.
(I blacked out my funds for privacy reasons obviously)Depending on the gas cost you paid it can take a few minutes, to a few hours, for your funds to arrive. Check https://etherscan.io/chart/pendingtx to see how busy the Ethereum network is.
When your funds are on the Etherdelta wallet you can start trading.
When you are done trading the withdrawal steps are similar. First navigate to the Withdraw tab, then input how much you wish to withdraw to your personal wallet and click withdraw. Again, be sure to have some ETH in your Etherdelta account to cover the gas cost.
Buying & Selling
To instantly buy or sell, just click one of the existing orders. A popup will appear with the details, and a buy/sell option. Confirm using your Ledger wallet. Keep in mind that clicking on existing orders costs gas as well as a buying fee, and as such it is the single most expensive action to take on this platform.
To play a Buy or Sell Order (which are both FREE) find the corresponding menu item in the bottom-middle of the screen, and click the Buy or Sell tab depending on your action and input the details. One thing of importance to note is that it is free to set a buy or sell order, but it does cost gas if you want to cancel them later on because they didn't go through! To avoid paying this cost you can adjust the Expiry time of the order. In the New Order screen, at the bottom a field will say 'Expires' followed by a default value of '10000'. This means the order will stand until 10000 blocks have passed. By lowering this value, your order will automatically cancel after the amount of blocks if it isn't filled yet. This is one way to avoid paying cancellation fees.
Orders stuck in the ether because of too low gas price
Unfortunately it happens, especially when you're new and trying this platform out, that your transaction is taking hours and hours and just doesn't seem to want to go through. If this happens you can override the transaction with one that does have a higher gas cost. It is a manual operation which is a slight hassle, but it does work, and when your funds are stuck you'll be happy to know you can still get them back. Read a guide on how to override and cancel transactions on Etherdelta here
and lastly...
Don't get discouraged!
Etherdelta is a 'bare bones' platform, sometimes best approached as a mechanical device rather than a company or service. There is no customer service to retrieve lost funds, and you are yourself responsible for your actions and funds! If something went wrong, or you paid too much, please don't blame the developers or owners of Etherdelta. The majority of the flaws are, in fact, due to the Ethereum blockchain. As such Etherdelta may appear to be rather low-tech compared to traditional exchanges, even though by it's very definition it is in fact higher-tech.
When I first started on Etherdelta I made some rookie mistakes, and that cost me quite some. I consider this to be part of the process: With new tech like this, there is bound to be some learning curve and you could really say blockchain as a technology is 'in Beta'. Some flaws are to be expected. But now that I have gotten the hang of it, I rather like it and prefer trading on Etherdelta because my funds never really have to leave my wallet and I no longer have to worry about my funds getting hacked on an exchange.
This should get you started and cover most of the important items. If you want to read more guides and how-to's, have a look at this thread on Reddit where you'll find several step-by-step guides which I myself have used in my learning experience.
Click here to visit Etherdelta
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