Swap Securely Through Ledger Live with our Third-Party Swap Providers

By Kirsty Moreland

Swapping is one of the most popular features within Ledger Live. 

In this article, we’ll take a deep dive into the mechanics of swapping through Ledger Live, via one of our third-party providers. Here, we explain exactly why this is the most secure way to swap.

In the world of crypto, there are literally thousands of coins and tokens to choose from. So what if you need to change one asset for another?

To do this, you have a few different options.

Centralized Exchange

One option is using a centralized crypto exchange. Here, you’ll have access to a wide range of options, but there are also compromises: to swap crypto here, you will need to entrust your funds to a platform wallet, where you don’t control the private keys.

This means you are ultimately not in control of your crypto while it remains in this wallet – if the exchange is hacked, censored or goes bankrupt, you’ll lose your assets.

Decentralized Exchange

Another possibility is using a decentralized exchange, or DEX. Here, you’ll be able to exchange one crypto asset for another, all from the security of your own crypto wallet – where you control the private keys.But again, there is a compromise: DEX protocols are nearly always built on a specific underlying blockchain. This means that users are limited to swapping tokens that share the same blockchain foundation – you could not, for example, swap ETH for BTC. 

So while Decentralized exchanges provide users with more security by enabling you to retain complete control of your private keys as you interact, the options they affer are limited by their underlying network.

Blockchain Bridges

Another way of exchanging one blockchain asset for another on a different blockchain is by using a bridge.

Blockchain bridges are a type of technology that enable users to exchange one coin for another on a different blockchain, without using an exchange. But bridges come with their own problems: their architecture, and the fact that they are still being developed and perfected, makes them vulnerable to hacks. This can be seen in the variety of bridge-based hacks we’ve seen make headlines, from the infamous Ronin Hack, which heavily impacted the Axie Infinite community early in 2022, to the more recent Nomad Bridge exploit, which saw more than $200 million in crypto lost via a malicious attack.

Crypto Swaps

Your final option is acquiring the crypto you want via a swap. Crypto swaps are similar to “buying” crypto – except in this instance, you’re purchasing your desired coins or tokens with another cryptocurrency, instead of with Fiat.

There are some notable advantages to using swaps to acquire different crypto assets:

• Not Constrained by Blockchain

For a start, your range of options is not a function of any particular blockchain – this means you can swap assets from completely different networks. We’ll cover that below.

• Swap Directly From Your Wallet

The other advantage of swapping is that you can engage with this interaction directly from your own crypto wallet, offering you the maximum possible security until the crypto leaves your wallet.

Crypto Swaps Explained

The principle of swapping is simple: services like Changelly are centralized platforms that offer swaps as a service. Let’s say, for example, that you want to swap BTC for ETH: the platform offers a “rate” for that exchange, including a commission, and sends your crypto from its platform wallet.

To properly understand the process, let’s take a closer look at the mechanics of swapping – and how swapping through Ledger Live, via one of our third-party providers, helps you mitigate your risk.

A Transaction with Two Parts

A crypto swap is a transaction with two parts: on the one hand, you have a set amount of crypto leaving your wallet and going to the swap provider; on the other, you have a set amount of another crypto leaving the provider and coming into a different account in your wallet.

For example, the provider may offer to swap 0.05 BTC for 0.7 ETH. To accept the offer, you, the user, must provide the Ethereum wallet address where you’ll receive the ETH; additionally, you must also send 0.05 BTC from your BTC blockchain account to the address provided by the swap platform.

Key Security Points

For you, the user, there are two parts of the swap process that have security implications:

1. You will sign the outgoing transaction, which is for the crypto you’re sending to the swap partner
2. You’ll also provide a receive address which is the wallet address where you’ll receive the incoming crypto

If you’ve already had experience of transacting with crypto, you’ll know that both of these interactions contain a degree of risk, and it stems from how the data is transmitted between the two transacting parties.

• The provider address that you receive needs to be verified on your side to ensure it is accurate. The risk is that the transaction may have been intercepted on its way to you, but altered by the hacker to display as normal on your screen, while the funds you’re sending are directed to a malicious wallet.

• Conversely, the user address (ie YOUR wallet address) should also be verified before it is sent to the swap provider, to ensure the funds will be sent to your wallet. Here, the risk is that a hacker may have interfered with the outgoing data, directing your incoming funds to a different person while showing the correct address on screen.

Unfortunately, if you’re using a hot wallet to make your swap, there is no way of really knowing that either of these details is accurate. Why? Because your digital wallet could have been tampered with via your internet connection, but still show the “correct” transaction details.

Man in the Middle Attacks: Key Threat to Your Swap

Typically, this type of attack entails two parts. The hacker changes the sending or receiving address to one of their own, so that they receive the funds. Simultaneously, they will tamper with the display of your wallet interface, so that the transaction appears normal despite the scam. As a result, you confirm the malicious transaction in good faith. 

The result? Either your sending or receiving funds will be lost to the hacker’s wallet. 

So how can you avoid this type of attack as you swap?

This is where swapping through a third-party provider within Ledger Live comes in.

For Maximum Security: Swap through Ledger Live

The most secure way of swapping your crypto is to use the swap feature within Ledger Live, which enables you to swap securely through one of our third-party swap providers. Here’s how it works, and why it’s so secure.

Swap via our Third Party Providers Through Ledger Live

You’ll initiate your swap through Ledger Live, via one of our third-party swap providers (such as Changelly). Once the quote is shown, you can accept the swap and confirm the transaction. This is where Ledger’s unique security infrastructure comes into play.

Secure Element: Safeguarding Your Transaction From Interference

As you know, each time you’re swapping crypto, hackers can intercept the outgoing and incoming transactions.

But when you swap within Ledger’s ecosystem and with our Nano device, tampering with a transaction is simply not possible. Let us show you why.

When you press Confirm, the Secure Element in your Nano will generate a signed transaction that encompasses both the outgoing and incoming elements of the swap. This transaction also has a unique transaction ID that is then sent to the swap provider, such as a crypto exchange. From then on, only that exact transaction with those specific details can be executed.

• Signature Verification

The swap provider will receive this transaction, and will send back their own confirmation—that is also cryptographically signed—along with the corresponding crypto. Secure Element verifies the signature of this incoming transaction to ensure it has actually been fulfilled by the provider.

• Transaction ID Verification

The ID of the incoming transaction is also checked to make sure it is the same one you agreed to. In this way, only that exact transaction can be executed—changing any of those details would result in a different transaction ID, and the swap wouldn’t be completed.

Benefit From Clear Signing

Aside from guaranteeing that only the exact swap you approved will ever be executed, swapping through Ledger Live also means you’ll be able to see full and accurate transaction details on the Trusted Display of your device. There is no other crypto wallet that can offer you this degree of transparency or security during the process, and the reason why swapping through Ledger Live is the most secure option for exchanging your crypto assets.

Swap Securely Through Ledger Live

There you have it: unlimited swapping options, total transparency and transactions direct from your Ledger wallet, as your private keys remain within the device.

Crypto transactions can be tricky to grasp, but knowledge is power. Now you understand the mechanics of swapping through Ledger Live, you have the power to make informed choices about how you manage your crypto.

Hackers and scammers love easy targets. And the hardest targets swap through Ledger Live.

See you there!

Knowledge is power