> For the complete documentation index, see [llms.txt](https://docs.drunkencats.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.drunkencats.xyz/product/swaps.md).

# Swaps

## Overview

The Swap feature lets you instantly exchange one token for another on the LitVM network. Swaps are executed on-chain through automated market maker (AMM) smart contracts — there is no order book, no counterparty and no waiting. You trade directly against liquidity pools.

***

#### Supported Tokens

All tokens issued on LitVM are available for swaps. Swap may not be possible if there is no liquidity pool for the selected pair. A liquidity pool can be created for any pair of tokens.

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#### How Swaps Work

Drunken Cats uses an **Automated Market Maker (AMM)** model, similar to Uniswap V2.

* **Liquidity pools** hold reserves of two tokens (e.g., zkLTC / dcUSD).
* When you swap, you deposit one token into the pool and withdraw the other.
* The exchange rate is determined by the **constant product formula**: `x * y = k`, where `x` and `y` are the reserves of each token.
* **Routing:** If no direct pool exists for your desired pair, the DEX will route your swap through intermediate pools (e.g., Token A → zkLTC → Token B).
* **Slippage** occurs when the swap size is large relative to the pool reserves, causing the price to move against you.

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#### 3.4 Slippage Settings

Slippage tolerance defines the maximum price difference you are willing to accept between the quoted price and the executed price.

* **Default:** The platform sets a reasonable default slippage tolerance.
* **Custom:** You can adjust the slippage tolerance in the swap settings. Higher tolerance means your transaction is less likely to fail, but you may get a worse price.
* **Recommendation:** For most swaps, 0.5%–1% is sufficient. For volatile or low-liquidity tokens, you may need 2%–5%.

> Swap preview shows expected sloppage. At mainnet, there will be maximum slippage setting.\
> If your slippage tolerance is too low, the transaction may revert with a "slippage exceeded" error. If too high, you may be vulnerable to front-running.

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#### Price Impact

Price impact shows how much your swap will move the market price. It depends on:

* **Swap size** relative to pool reserves — larger swaps cause greater price impact.
* **Pool depth** — deeper pools (more liquidity) absorb large swaps with less impact.

> **Warning:** If the price impact exceeds 5%, the UI will display a warning. Consider splitting large swaps into smaller trades or waiting for deeper liquidity.

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#### Fees

| Network     | Swap Fee                                       |
| ----------- | ---------------------------------------------- |
| **Testnet** | 0% - no fees during early testing phase        |
| **Mainnet** | 0.3% per swap - fees go to liquidity providers |

* On testnet, swaps are completely free (no protocol fee). This is to encourage testing and early usage.
* On mainnet, a **0.3% fee** will be applied to each swap. This [fee is distributed to liquidity providers](/economic-model/fee-distribution.md) as a reward for supplying pool reserves.
* Standard gas fees (in zkLIT) apply on both testnet and mainnet.


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