Routing & Exchange
Fixed vs. Floating Exchange Rates: Which Should You Choose?
Compare the mechanics of fixed and floating exchange rates in non-custodial routing, and learn how to choose the right strategy for market volatility.
By BetaExchanger Research · Published · Updated · 6 min read
Key takeaways
- Floating rates finalize your payout based on the market price at the exact moment your deposit clears.
- Fixed rates guarantee the quoted output regardless of market fluctuations, but the provider locks this rate for only a short time.
- Providers charge a slightly higher spread on fixed rates to insure themselves against sudden market drops.
- Use fixed rates during high volatility, and floating rates during calm markets or when sending slow-confirming assets.
When you compare swap routes on BetaExchanger, you will often see a toggle allowing you to switch between Fixed and Floating rates. Understanding how these mechanics interact with blockchain settlement times is crucial for optimizing your returns.
The Floating Rate Mechanism
A floating rate provides an estimate based on current market conditions. However, the final exchange rate is not locked when you click 'Create Exchange'. Instead, it is locked at the exact moment the provider's node registers your deposit as fully confirmed.
If the market price of your target asset goes up while you are waiting for block confirmations, you will receive slightly less crypto than estimated. If the price goes down, you will receive more. The provider takes no market risk, which allows them to offer the tightest possible baseline spread.
When to use Floating Rates:
- The market is relatively calm and stable.
- You are transferring large amounts and want the lowest possible platform fee.
- You are depositing from a slow network (like Bitcoin) where confirmations might take longer than a fixed rate's lock window.
The Fixed Rate Mechanism
A fixed rate acts as a guarantee. The provider promises that if you deposit the exact specified amount within a strictly defined time window (usually 15 to 30 minutes), you will receive the exact output amount quoted, regardless of what the market does in the meantime.
To offer this guarantee, providers must hedge against sudden price drops. Therefore, a fixed rate quote will almost always yield slightly less output than a floating rate quote at the moment of comparison. You are paying a premium for certainty.
When to use Fixed Rates:
- The market is highly volatile and you want to lock in a specific price spike.
- You are making a payment for a specific invoice amount and need guaranteed exact delivery.
- You are transferring fast-settling assets (like Solana or Polygon) where you are certain to beat the expiration timer.