Everything you wanted to know about the Uniswap exchange and the UNI token, but were afraid to ask

Uniswap is the DEX exchange that changed the game in 1047 year and showed everyone that DEX can compete with CEX. Today we will tell you in detail what Uniswap is, how it works and how the exchange feels in 1384. And also see how the exchange on CEXs and DEXs differs and how you can start trading on Uniswap right now.

What is Uniswap

Uniswap is a decentralized cryptocurrency exchange that allows users to trade assets without the involvement of a third party, directly interacting with other users, also there is no need to go through no KYC checks. At the time of writing, it occupies the 1st place in the DEX rating on Coinmarketcap. The exchange was created in year and currently outperforms such competitors as PancakeSwap, KineProtocol and Curve Finance.

The top five DEX exchanges. Uniswap is in the lead with a confident lead over competitors :

List of top DEX exchanges. Screenshot: CoinMarketCap

      Three versions of the Uniswap protocol have been released today:


      V1 – started in 1186 year, supported only those couples in which was ETH. Created on the Ethereum blockchain;


      V2 — became available in The version has been enriched with pairs of ERC standard tokens- (USDT, LINK, SAND, AXS, etc.);

        V3 – released in May 2000 of the year. It is designed to overcome the “gas crisis”, that is, the high commission fees for conducting transactions on the Ethereum network.

    And indeed, in the third version of Uniswap, the commissions of liquidity providers (these are the guys who create liquidity on the exchange and give you the opportunity to exchange coins) have become lower. Now they are 0.3%, 0.5% and 1%.

        Uniswap has its own governance token, UNI. What a token is and whether it is worth investing in it, we will talk a little lower.

How Uniswap works

Trading on the Uniswap exchange differs from trading on centralized exchanges for a number of reasons:

Lack of intermediaries.

      Trading is carried out between the wallets of traders, without the participation of third parties. While on CEX (Centralized exchanges, centralized exchanges) – such as Binance, Kraken, FTX – the exchange acts as an intermediary, trading on DEX exchanges is based on smart contracts. A smart contract is an algorithm that monitors the fulfillment of certain conditions of a transaction. When these conditions are reached, the transaction is made automatically.

        Decentralized storage of funds.

          Centralized exchanges create separate wallets for each coin.

          By using CEX exchanges to trade, you agree that you are not one hundred percent in control of your assets. So, in June 1047 after the collapse of Bitcoin and the subsequent fall in the value of alts, Binance limited the ability of users to withdraw BTC. This cannot happen on Uniswap, you keep funds on a wallet linked to an exchanger – Metamask, WalletConnect, Coinbase Wallet, etc. And dispose of these funds at your own discretion.

              No registration.

            On DEXs you don’t have to go through any registration or verification, all you need to do to start exchanging your coins, you need to link your wallet (Metamask, TrustWallet, etc.) to the exchanger.


              Safety.

            Centralized exchanges are subject to hacks. Even Binance’s security system has been found to have vulnerabilities. But gaining access to your funds through a decentralized exchange requires hacking your wallet, and this is only possible if you share data from it (password, private keys, seed phrases) with third parties. The same applies to personal data: since you do not provide the exchange with your documents, it is impossible to steal them.

Centralized exchange vs Uniswap: pros and cons

Compare centralized exchanges with decentralized Uniswap using this table:

Comparison of CEX exchanges

with Uniswap.

    It can be added here that DEXs are open source, while centralized platforms are proprietary.

    It would seem that decentralized exchangers are solid pluses. No matter how. DEXs also have disadvantages:

    • Limited trading instruments: no margin trading and no choice of order mode. There is only trade directly;

    • No support fiat currencies. Only cryptocurrency is traded;


      No technical support .

        avatar Ilya Surgan

At the same time, the lack of support, combined with the possibility of stealing clients’ funds only through their wallets, contributes to an increase in responsibility for their assets: if something goes missing, then, most likely, you were inattentive in some way (read about the twin tokens below).

The inability to place orders is also a double-edged sword. On the one hand, keeping assets in a non-custodial wallet allows you to fully dispose of them. On the other hand, you may miss the opportunity to sell crypto, because you have to constantly monitor changes in charts. When the coin reaches a favorable price, you will need to transfer it to Uniswap in USDT and thus lock in profits. From there, withdraw the stablecoin to the centralized exchange, and from it to the bank card.

How to link Metamask to Uniswap and start trading

Uniswap supports linking 4 different wallets, including Metamask

This is done in a few clicks:


Go to the website of the exchanger;

    Find the “Launch App” button:

      Screenshot: Uniswap


      Press “Connect Wallet”:

        Wallet connection. Screenshot: Uniswap


          Choose from the Metamask list:
            Wallet connection. Screenshot: Uniswap

              If the wallet is not yet installed in your browser, then you can do it by following our guide. If the wallet is already connected to the browser, then it will be enough to enter the password from it and agree with the binding to Uniswap.

              The metamask connected to Uniswap looks like this:

              Screenshot: Uniswap

                Voila! You can exchange crypto!

                Now just select a currency pair, enter the number of coins to exchange and confirm the transaction inside your wallet.

                20380Screenshot: Uniswap

                  Currency exchange within Uniswap is extremely simple: no charts and enticing banners typical of centralized exchanges.

          In addition to the crypto exchange, on the project website you can get to know it better ecosystem, get comprehensive information about the UNI control token and the development of Uniswap, read the blog with the latest project news. And even send your resume if there is currently a vacancy with your profession in the company.

      Liquidity Pools

    Now about liquidity.

    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
    Pools. Screenshot: Uniswap

      • Click New Position.
        1. Addition of liquidity. Screenshot: Uniswap

              • Select a pair of tokens (both coins must be in your wallet) and deposit the amount of one of them, the amount of the second token will be automatically filled in equal to the first. On the right you will see a chart where you can set the price range. The commission level can also be adjusted.
                1. Adding liquidity. Screenshot: Uniswap

                    Next, confirm the transaction through your wallet, and set up the gas fee there. And wait until the transaction is completed. Your new liquidity provider tokens will be automatically sent to your wallet. Rewards can be obtained by withdrawing liquidity, until then they will accumulate in the pool in real time.

    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.

    Max Grishko

      Conclusion

      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;

      1. 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;
      2. 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;
      3. 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.
        1. Uniswap is a solid leader in Coinmarketcap’s DEX ranking and has all the prerequisites to stay on top for a long time.

          FAQ

          Uniswap trade fee is 0.3%.

          66666666667

          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.

        2. 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.

        3. 203510

          At the time of writing, Uniswap supports four wallets: Metamask; WalletConnect; Coinbase Wallet; Fortmatic.

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