.png)
Uniswap is the largest decentralized exchange (or DEX) operating on the Ethereum blockchain. It allows users anywhere in the world to trade crypto without an intermediary. UNI, the governance token that allows users to vote on key protocol changes.
It was created by Hayden Adams, Uniswap is an exchange protocol that is decentralized and is based on Ethereum to exchange ERC20 tokens. It is an automated liquidity system, which means it doesn't follow an traditional "order book" model. It permits its users to trade and swap tokens without any intermediaries. This ensures an extremely high level of decentralization.
Uniswap is among the most popular DeFi projects, and is not intended to charge any fees. It functions as an open source tool that takes middlemen out of the process and makes use of the pools of tokens to determine the prices of tokens without charging any platform charges as well as listing charges. Any ERC-20 token is able to be launched using Uniswap when there's an available liquidity pool.
Uniswap is one of the original decentralized exchanges and quickly became the most popular with its simple trading interface for crypto swaps. Users can quickly launch the web-based app, connect a digital wallet and begin trading.
Users can swap Ethereum-based coins as well as use one of the bridges to swap tokens that use other protocols. With over 600+ tokens to choose from without account registration or KYC process, Uniswap is a great option to swap tokens anonymously on an easy-to-use platform. Moreover, Uniswap efficiently routes transactions to save in swap fees. Users can view the route to see where the transaction is routed and where the fees go.
Uniswap does not provide its liquidity for tokens but relies on users to join and delegate their assets to liquidity pools. Uniswap allows users to create their pools, which is typically a pairing of digital assets, such as USDC/ETH. Users deposit an equivalent amount of each coin and will earn transaction fees when their pool is used to process a transaction.
Users can also browse the top pools (by total value locked) and add liquidity to join the existing pool. Higher-volume pools will pay out more often, as the pool will process more transactions than smaller pools. But the fees may be slightly lower per transaction. For more information on liquidity pools, read this article that explains how liquidity farming works.
Uniswap offers a low flat fee of 0.3% per transaction on crypto swaps. This is competitive with the larger centralized exchanges and allows users to save money on transactions. That being said, depending on the network being used, the network fees may be much higher due to network activity. Ethereum is notorious for high gas fees during high market volatility.
To offer competitive swap fees, Uniswap allows users to exchange tokens on the Polygon network or use the Optimism of Arbitrum bridges. By partnering with these networks, Uniswap traders can lower the excessive gas network fees during peak volatility.
Uniswap does not have a Know Your Customer (KYC) verification process. Moreover, users can use the platform without signing up and creating an account due to the decentralized structure of the platform. A digital wallet that is compatible with the Ethereum network (e.g. Metamask wallet) and connected to the Uniswap web application is the only requirement to begin trading.
Since Uniswap does not have user accounts and trading is performed using individual wallets connected to the platform. As such, there are no minimum or maximum limits on Uniswap transactions. However, large transactions on the Ethereum network may come with high gas fees, or outright fail if they take too long to fill. More importantly, orders can be limited by the amount of liquidity available within the pool.
While Uniswap does not offer a mobile app, users can still make trades on the go using the Uniswap web application on a mobile browser. The website is mobile optimized to connect a mobile digital wallet, place trades and provide liquidity, all from your phone.
This experience may be a bit more cumbersome and risky. However, once a wallet is connected, it is a fairly similar process to using the platform on the desktop to select which crypto to trade, and swap coins. The only difference is that users will need to approve the transaction in the mobile wallet application, as opposed to a web browser plugin. In short, the lack of a mobile app on Uniswap is a downside that can lead to human errors entering a wallet address.
Uniswap is one of the most popular DEXs on the market, and a great place for experienced traders to explore trading directly on the blockchain. Uniswap is one of the most popular DEXs, regularly processing over $2 billion in daily volume on the platform. Uniswap is a crypto-only exchange, meaning that all trading happens between crypto trading pairs, such as DAI-ETH, and fiat currency is not available for trading.
Uniswap also facilitates trades from its liquidity pools that allow users to contribute to delegating their coins to earn rewards from processing fees. These pools are made up of crypto pairs (such as ETH-USDC) and contribute to the trading platform allowing users to transact without the need for a centralized liquidity source.
Uniswap does not offer many features in comparison to a traditional centralized exchange such as leverage trading, interest-bearing accounts, lending or an NFT marketplace. Uniswap is purpose-built to focus on crypto swaps and liquidity pools.