How is the exchange amount calculated?

When performing an exchange in the SwissBorg app, our innovative Smart Engine finds the best execution route for you, meaning you get the best price from multiple exchanges. The final execution price (firm rate) might differ from the initial price shown in the estimate screen (indicative rate). The indicative rate is an estimated exchange rate based on the current market prices, while the firm rate is the final exchange price at which you made your exchange. Because the crypto market can move quite quickly, sometimes the price may change in between when you are shown the indicative rate (before you make your exchange) and the firm rate you are shown after your exchange has been made. This is further explained in this example of exchanging BTC for USD:

BTC/USD Order book:

Indicative rate = (Top_Ask + Top_Bid) / 2 = 55K /BTC
Spread = Indicative_rate - Top of the book (=(Top_Ask-Top_bid)/2 )= 5K ( ~9% of the indicative rate)

Quote request: I want to sell 2 BTC
Average sales rate : 90K = 2 BTC => 45K/BTC

We then apply the fees from the exchanges platforms ( assuming : 0.03% ) = 0.027$ => 89.973k 

Firm rate : 89.973k / 2 = 44.9865k $/BTC
You will receive : 89.99k$

Slippage is the difference between the average execution price and the initial midpoint of the bid and the offer for a given quantity to be executed. It is calculated as follows:
indicative rate - average sales rate = 55k - 45k = 10k (22% of the average price)

Slippage warning

Let’s say your display currency is USD.

So before your exchange, you see the value of your BTC in USD in your portfolio balance based on the indicative rate (2BTC at 55K/BTC = 110K). Portfolio balance = 110K USD

Because the bid price and the ask price are NEVER equal, once you perform an exchange, you will never buy the USD at the indicative rate price. The effective price will be the first line in the order book (in the above example, you would get at the price of 45/BTC).

So after your exchange you will see a difference in your portfolio balance. Portfolio balance = 89.99k USD

This is also the case if you are Generation Premium, because the slippage depends on the market conditions and this is NOT due to SwissBorg’s fees. The greater the slippage, the greater the difference in your final balance.

In order to protect you and to warn you of bad market conditions, we currently have a warning when the slippage is too high.

This warning is displayed when the difference between the indicative rate and the firm rate is too high.

However, for small coins with low volume (few lines in the order book) there is a lower chance to be able to have very low slippage. Therefore, the threshold at which we start this warning depends on the coins involved in the exchange (max of both coins). Small coins (such as OCC) will start warning about high slippage much more. You may find the exact amount in annex of this document.

What does that mean? An exchange that involves small coins may affect your balance more than an exchange involving big coins. Be careful!

Balance difference due to display currency in exchanges

At SwissBorg we want to create an easy experience for everyone. Therefore you will find all along the app all amounts displayed in your display currency (that you may change in your settings). However, in case of exchanges this can cause confusion.

Let’s go back to our BTC → USD exchange, but let’s now consider that you have ETH as display currency.

Before the exchange, you will see your BTC balance in ETH. To do so we use the BTC-ETH order book in order to give you an APPROXIMATE value of your BTC in ETH. This is theoretical, it is the value you would have in ETH if you would exchange your BTC to ETH right now (slippage excluded).

After the exchange, you will see your USD balance in ETH. To do so we use the USD-ETH order book in order to give you an APPROXIMATE value of your USD in ETH. This is theoretical, it is the value you would have in ETH if you would exchange your USD to ETH right now (slippage excluded).

You now see how, by making an exchange from BTC to USD your balance in your portfolio can change significantly even if you make a GOOD exchange (low slippage). Simply because the market USD-ETH is not as good as the market BTC-ETH. The amount you see in your display currency balance are all theoretical.

Execution-quote difference

The market and therefore the order-book is changing every second. For this reason, we may not be able to execute the exchange at the price we quoted you. However, we protect you from big market movements. To do so, we calculate the difference between the quote price and the execution price. A difference up to 3% is considered acceptable. Above this, the exchange will be cancelled.

So if we have the following quote:

Quote request:

Sell : 2BTC
Firm rate : 89,910 / 2 = 44,955 $/BTC
Buy : 89,910$

We will authorise at maximum the execution:

Sell : 2BTC
Worst rate accepted: 44,955 $/BTC - 3% = 43,606.35 $/BTC
Worst case buy: : 87,212.7$

If the difference is more than 3%, we do not execute the exchange.

Why is the price I got not as good as the one in one of the exchanges?

You should bear in mind that the price the exchanges display, do not include fees. Fees are added later on, whereas the prices that we display already include the fees. So you may think the price at Binance for instance was better at the time but actually, after including the fees it might not have been the best option !

This is the power of the smart engine! We are making all these complex calculations and comparisons for you!