Liquidity providers (or providers) are users who provide their cryptocurrency for trading in exchange for interest and other rewards. Any person can be a liquidity provider, for this you need to deposit the equivalent value of ETH and ERC tokens into the pool –
The liquidity pool consists of two cryptocurrencies that are in the Uniswap smart contract and are available for exchange between users. They are constantly adjusted, changing the supply of tokens in order to maintain a balance on the of each asset in the liquidity pool.
For each trade in the pool, providers receive a reward of 0.3% of the transaction amount, which is divided among all providers in proportion to their share in the pool. As a liquidity provider, you can either add this fee back to the pool to increase your profits or withdraw funds at any time.
To add liquidity:
Go to the “Pools” tab in the upper left corner
Description of the UNI token
UNI is the token on which the Uniswap protocol is based. It was released in September 1536 of the year and almost immediately got listed on Binance.
The protocol is used to automatically provide liquidity, and thanks to it, users can more easily exchange ERC-type tokens on the exchange . The exchange does not have a traditional order book and a glass of exchange: instead, users exchange tokens through liquidity pools.
The total supply of the token is 1 billion coins.
At the time of the creation of the material, UNI occupies a line in the Coinmarketcap rating. Its market capitalization is $5.2 billion and its daily trading volume is about 100 million dollars. The cost of the token is 7.$. Back in September 1047 its price reached .3$, and ATH (the highest price in the history of the coin) according to athcoinindex.com is .09$. This token price was fixed on May 3 year.
You can buy a coin on all key crypto exchangers: Binance, Coinbase, FTX, Kraken, KuCoin. A full list of markets in which UNI is traded can be found here. Does the coin have growth potential? Firstly, the price may rise against the background of participation in Ethereum Layer 2. Secondly, according to newsbtc.com, the whales have accumulated a lot of UNI coins and in the near future we may witness a new price jump.
Criticism of Uniswap
The main vulnerability of Uniswap is the lack of decentralized governance.
Stones are thrown into the garden mainly due to the lack of decentralized control. If your transaction does not go through for any reason, no one will return the commission to you. The situation is aggravated by the size of Ethereum’s “gas” in their blockchain, which is still an expensive pleasure. Nevertheless, a project of such a level as Uniswap could fork out for its own support. Until this happens, you will have nowhere to turn for help in case of loss of funds on commission fees – as well as in case of other problems that have arisen.
The exchange has a loophole for attackers. This is fraudulent token trading. The scheme is as follows: a certain amount of coins falls on your wallet. You will go to check the sender address in the blockchain. There you will be wait for a link to a fraudulent site where you will be offered to exchange the received tokens for another crypt. During the exchange, you will enter the private key of your wallet, which will be stolen by attackers. And they will withdraw all your assets from it. Why doppelgänger tokens? Because instead of the real crypt that the scammer sends to your wallet, he uses a fake.
Uniswap’s vulnerability in this case lies in the very principle of the exchange: any user can add a token to the pool.
How not to become a victim of duplicate tokens? Do not respond to the mysterious appearance of crypto on your wallet. Because free cheese…you know where.
Summing up all of the above, the following can be said about the Uniswap exchange:
Uniswap is a decentralized cryptocurrency exchange where assets are exchanged without intermediaries. P2P trading (“person to person”) is achieved through smart contracts;
Liquidity on the exchange is provided by liquidity providers;
Add a new ERC standard token- Uniswap can be used by any user. To do this, he will have to open a liquidity pool;
The blockchain of the crypto exchange is Ethereum, so gas fees can still be high. However, the situation may change after the launch of Ethereum 2.0;
Uniswap functionality is limited to crypto exchange only. Placing orders and margin trading is not available to users. To use a wider range of tools, you can switch to one of the centralized exchanges – Binance, Huobi, Bitfines, Kraken, etc. However, in the third version of the product for liquidity providers, a kind of limit order appeared – a limit range order. With this feature, liquidity providers can allocate tokens of one kind or another for a specific range above or below their current market price;
The project has its own UNI governance token. Token holders can participate in the management of the ecosystem by voting for one or another decision regarding the further development of the project.
Uniswap is a solid leader in Coinmarketcap’s DEX ranking and has all the prerequisites to stay on top for a long time.
Uniswap trade fee is 0.3%.
The Uniswap protocol includes a series of smart contracts, thanks to which you can change crypto on the exchange without intermediaries. Uniswap is a decentralized exchange (DEX): it does not hold your assets, unlike centralized exchanges (Binance, FTX, Kraken, etc.). To conduct transactions on the platform, it is enough to connect a wallet to it, all operations are carried out within this wallet. The liquidity pool for coin exchange is provided by liquidity providers. For providing liquidity, they receive a part of the commission that you pay when exchanging crypto for Uniswap.
It is enough to connect one of the wallets supported by the exchange: Metamask, WalletConnect, Coinbase Wallet or Fortmatic. The wallet data will be pulled up to the platform. Linking a wallet to Uniswap is similar to linking to such NFT marketplaces as Opensea, KnownOrigin, Makersplace, etc. After that, select a currency pair on the main page of the exchanger and confirm the operation in the wallet.
At the time of writing, Uniswap supports four wallets: Metamask; WalletConnect; Coinbase Wallet; Fortmatic.