Uniswap is a completely decentralized financial protocol used to exchange cryptocurrencies. A currency exchange is called a "swap". Currently, the average weekly trading volume of Uniswap is $10 billion. Investors have used Uniswap because of its usefulness in decentralized finance (DeFi).
Operation ⚙️
Uniswap is a set of computer programs that run on the Ethereum blockchain and allow tokens to be exchanged in a decentralized way. Decentralized here means that it operates without any authority, this service is self-powered by its users. Uniswap should be visualized as an entity where lenders place cryptocurrency liquidity on this platform, so that other users can come and make their exchanges.
Individuals and bots; called "liquidity providers"; deposit liquidity to the exchange by adding a pair of tokens to a smart contract that can be bought and sold by other users. In return, the liquidity providers receive a percentage of the trading fees earned for that pair of trades. For each trade, a certain number of tokens are removed from the pool for an amount of the other token, thus changing the price. No fees are required to list the tokens, allowing access to a large amount of Ethereum tokens and no registration is required for users.
Traders can trade Ethereum tokens on Uniswap without having to trust anyone with their funds. Meanwhile, anyone can lend their cryptocurrency to reserves called "liquidity pools." In exchange for contributing money to these pools, they receive commissions.
It's a win-win situation for everyone.
If you're looking for Ethereum-based tokens, you'll definitely find them at Uniswap. If you want to make liquidity available, you will be paid to feed a "pool" on the service.
Use 📱
Connecton 🔐
To use Uniswap it is very simple, you just have to go to app.uniswap.org. Then connect your Ethereum wallet with MetaMask for example. You can also use TrustWallet's Wallet Connect or Coinbase Wallet depending on your preferences. Sign the certificate and your wallet is ready for use on Uniswap.
Choice of the pair 💵/💶
On this step you will have to choose which currencies you want to exchange.
In this example, we deposit Ethereum against Shiba. Initially, you can deposit different "bases" of Ether, DAI, USDT or USDC. Then exchange them for any Ethereum token (ERC-20) already present in a liquidity pool. In case you want to sell one token for another, simply use the same process by reversing the values.
Anyone can add a token to Uniswap. It is very important to check the address of the tokens you swap.
Confirmation ✅
A summary of the service charges will appear. Confirm the swap, then validate the transaction. A window opens to sign the Smart Contract, check that you have enough funds to cover the Ethereum network fees. Wait a few minutes and it's done. You have exchanged Ethers for Shiba Token.
The "slippage tolerance" is the difference between the expected price of a transaction and the price at which it is executed. It is therefore the difference that you agree to pay in case of a change in the price of the currency, while your transaction is being processed. On very volatile currencies, it may be worthwhile to select a slippage rate of 5% or more.
Adding liquidity 💰
To add a crypto, that you own or that you have created. You need to go to the "Liquidity" tab and then the "Create a pair" or "+ new position" button depending on your version of Uniswap. Then import the equivalence of your token in Ethereum to create the pool and allow users to exchange the newly listed liquidity. Depending on the price of the token, you will have to bring for example 1ETH for 2000USDT the difference will be automatically calculated by the service.
In case users swap the crypto you have deposited; you are remunerated according to the fees taken from the transactions that took place thanks to your token contribution.
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