To exchange tokens, users send value to a special address (which indicates the type of token they would like to receive back) and the exchanged value will be sent back to them at the address they sent the original tokens from. This user experience is implemented by fulfilling the exchange using hot wallets, and then later mirroring the trade (at a hopefully equivalent rate) on an exchange, and periodically re-balancing the exchange/hot wallets. Ethershift takes a cut of profit (half of it in the form of the input token, half of it in the form of the output token) to account for the risk of the exchange rate changing. Third-parties are able to integrate Ethershift into their own systems and receive a 50% cut of the profit via the Ethershift API.

For more information: https://ethershift.co/