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What is DeFi and how does an on-chain swap work?

A practical map of what happens before, during and after you exchange tokens from a self-custody wallet.

DeFi is a set of financial applications built with smart contracts on public blockchains. In an on-chain swap, your wallet requests a quote, you review the route and permissions, and only then sign a transaction that the network validates. The interface helps prepare the action; your wallet holds the keys and authorizes it.

DeFi education guide

Approved for indexing

Last documentary review: 2026-08-04

01/Quick comparison

The details to check before you decide.

Key pointWhat it meansWhat to check
ConnectShare a public address with the interface.No token moves simply because a wallet is connected.
QuoteEstimate output, route, network cost and slippage.A quote is time-sensitive, not a guaranteed final amount.
ApproveAllow a smart contract to use a token when required.Review the token, spender and allowance before signing.
SwapSign and broadcast the transaction from the wallet.The blockchain confirms success or failure on-chain.
02/What to consider

Your wallet authorizes

The interface prepares the action; your wallet signs it.

The quote can move

Review output, minimum received, route and network cost.

Verify on-chain

Use the transaction hash to confirm the final result.

03/Step-by-step guide

DeFi in plain language

DeFi replaces part of the role of a financial intermediary with public smart-contract rules. The applications are accessible through a compatible wallet, while balances and transaction history remain visible on the blockchain. Open access does not remove risk: contracts, tokens, front ends and user approvals all need scrutiny.

A swap is a transaction, not an account transfer

An on-chain swap calls one or more smart contracts. The wallet prepares or receives the transaction details and shows what the application wants you to sign. Once signed and broadcast, validators process it according to the network rules. There is no conventional withdrawal step because the tokens start in your wallet.

Quote and route

Before signing, the interface calculates an expected output from available liquidity. A route can use one pool, several pools or an aggregation layer. The quote may change as market prices, liquidity and network demand move, so compare the expected output and minimum received rather than looking only at the displayed rate.

Approval and signature are different

Some token standards require an approval transaction before the swap. Approval gives a named smart contract permission to spend a token within an allowance; the swap signature then authorizes the exchange itself. Read both prompts and avoid unlimited approvals unless you understand and accept the exposure.

Confirmation and verification

After broadcasting, use the transaction hash in a block explorer to check status, contract interactions, fees and token movements. A submitted transaction can remain pending or fail, and network fees may still be charged for failed execution because the network performed computation.

Where Latin Link fits

Latin Link is a non-custodial liquidity aggregator interface, not a wallet and not a custodian. You connect a compatible self-custody wallet and authorize transactions there. Latin Link uses OpenOcean routing to consider eligible liquidity sources; the displayed route is a time-sensitive estimate, not a guarantee of the best possible execution.

04/Related guides

Keep comparing routes and decisions.

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Self-custody vs custody

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What non-custodial really means

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DEX vs CEX vs liquidity aggregator

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What is DeFi liquidity?

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Slippage, price impact and gas

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05/FAQ

Common questions about this topic.

Does connecting a wallet move my tokens?

No. Connecting normally shares a public address. Tokens move only after you sign a transaction or previously granted permission is used.

Why can the received amount change?

Quotes react to pool liquidity, market activity, route availability and network conditions between calculation and execution.

Can an on-chain swap fail?

Yes. Slippage limits, insufficient gas, a changed pool state or a contract error can make execution fail.

Where can I check the result?

Use the transaction hash on the official block explorer for the selected network.

Is Latin Link a wallet?

No. Latin Link is a non-custodial liquidity aggregator interface. A compatible external wallet manages your keys and signs the transaction.

06/Sources and limits

Limitations

This guide is educational and is not financial, investment, legal or tax advice. Tokens, smart contracts, approvals, wallets and blockchain networks involve risks, including irreversible loss. Verify current product support and transaction details before signing.

Ready to review a live route?

Open the swap and review the network, tokens, amount and slippage. When shown, compare the route, costs and minimum received; confirm everything in your wallet before signing.