How To Use A Smart Contract Custody Exchange (“SCCE”)

The EtherDelta smart contract; the engine of the exchange.

Smart Contract Custody Exchanges (“SCCE”) were the very first generation of decentralized exchange mechanisms. They enable anyone with an Internet connection to trade between ETH and ERC20 pairs entirely on the Ethereum blockchain without providing any personal information.

SCCEs are made up of individual smart contracts that handle all aspects of a trade from custody, order book management, and trade settlement — all performed entirely on-chain. This is different from Relayers, which use a hybrid approach where order books are centrally managed off-chain and trades are settled on-chain.

This article provides a step-by-step overview of what it’s like to actually make a trade on from start to finish on the Ethereum blockchain. I chose to use EtherDelta, as it is one of the first (and most popular) SCCEs.

It only makes sense to trade very small amounts on SCCEs. As always, never spend more than you can afford to lose entirely.

🦊 Step 1: Download & Install MetaMask

Follow the instructions to setup your MetaMask wallet.

💸 Step 2: Fund your MetaMask Wallet

Use your exchange/wallet of choice to send ETH to your wallet address.

🌐 Step 3: Go to https://etherdelta.com

You need to log into MetaMask in order to use EtherDelta.

Log into MetaMask by clicking the fox logo in the top right of your browser window and entering your password:

Click the fox icon in the top right of your browser to bring up the MetaMask login screen.

Your screen should now look something like this:

Your screen should look like this after you’ve logged into MetaMask and gone to EtherDelta.

💎 Step 4: Select the Asset You Want to Buy

Click this button to choose the asset you want to buy.

I like ZRX for reasons stated in my previous article, so I chose that.

💰 Step 5: Deposit ETH

Clicking the “Deposit” button will cause MetaMask to present a notification; make sure you have sufficient gas settings (I recommend a Gas Limit of 250k and Gas Price of 25 GWEI) then click the “SUBMIT” button to continue:

I recommend a Gas Limit of 250k and Gas Price of 25 GWEI to ensure a quick deposit.

You should then see this confirmation from EtherDelta:

The resulting transaction for my deposit from MetaMask to EtherDelta.

You have now given custody of your ETH to the EtherDelta smart contract; once the transaction confirms you will be ready to trade!

🤝 Step 6: Make A Trade!

Limit Order

You can make Limit Order in EtherDelta using the NEW ORDER box:

My Limit Order to buy 3 ZRX @ 0.00158 ZRX/ETH.

You’ll see the following notice from MetaMask after clicking the “Buy” button. Don’t be alarmed — click the “Sign” button to give EtherDelta permission to place your order:

Don’t be alarmed by this notification— click Sign.

You will see your Order appear in the MY TRANSACTIONS box:

Default expiration time for Limit Orders is 10,000 blocks (approximately 41 hours).

Market Order

Click the lowest-priced sell order to bring up the Market Order screen.

Clicking an order on the order book will bring up the order so you can fill it:

Enter the amount that you want to buy then click the “Buy” button.

You will again have to confirm this transaction with MetaMask; don’t forget to include sufficient gas:

Click the “SUBMIT” button to confirm your Market Buy Order.

You’ll then get a confirmation from EtherDelta:

The resulting transaction for my Market Buy Order.

❓ So Now What?

💸 Step 7: Withdraw Coins from EtherDelta!

Withdraw to MetaMask

This screenshot shows that I have a balance of 6 ZRX on EtherDelta and a , and I want to withdraw 3 ZRX.

Click the “Withdraw” button to trigger the MetaMask confirmation:

This confirmation screen should start to feel familiar by now…

As usual, an EtherDelta confirmation notice will follow:

The resulting transaction from my ZRX withdraw to MetaMask.

The ERC20 tokens will be transferred to your MetaMask wallet, but there are some additional steps that will need to be taken to see them in MetaMask:

A good tutorial on how to add ERC20 tokens to MetaMask.

Transfer to Another ERC20-Compatible Wallet

The “Transfer” tab allows you transfer tokens to a separate (non-MetaMask) ERC20-compatible wallet.

The “Transfer” button will display the familiar MetaMask confirmation:

Don’t forget to include enough gas!

Click “SUBMIT” to complete the withdrawal:

The resulting transaction from my ZRX withdrawal to an external ERC20-compatible wallet.

🎯 A Note About “Decentralization”

EtherDelta uses a centralized Graphic User Interface (GUI) which is vulnerable to hackers and outages.

👎 Conclusion

Bitcoin Compliance Professional