Many inventors are thinking of new ways to build decentralized exchanges, and one of these pioneers is Uniswap. The way Uniswap works maybe a little more challenging to understand compared to the existing DEX. However, this model has several attractive advantages.
However, the result of this innovation has become one of the most successful projects that are part of the Uniswap Decentralized Finance (DeFi) movement.
Let's look at what Uniswap is, how it works, and how you can easily exchange tokens for your Ethereum wallet.
What is UNISWAP?
Uniswap is a cryptocurrency exchange technology that operates based on decentralization. With smart contracts, the protocol permits programmed transactions with cryptocurrency tokens on the Ethereum Blockchain.
Uniswap is an entirely decentralized and different type of exchange. It uses a relatively new trading model known as an automated liquidity protocol that is not owned or operated by a single company. Uniswap platform was developed on the Ethereum Blockchain in 2018 and is compatible with all ERC20 tokens and wallet services such as MetaMask or MyEtherWallet.
Uniswap is also open-source. That is, anyone can copy the code and set up their decentralized exchange. That's how much users can list their tokens on exchanges for free. In general, this alone makes a noticeable difference, as central exchanges are profit-driven and require very high fees to list new coins.
Uniswap is also a decentralized exchange (DEX). It means that users always maintain control of their funds, as opposed to centralized exchanges, where traders have to relinquish control of their secret keys to record their orders in an internal database, rather than running on a Blockchain, which saves time and money.
Maintaining ownership of the secret key eliminates the risk of losing assets in case of hacking. Today, Uniswap is the 4th most extensive network of decentralized finance (DeFi), with more than $3 billion in crypto assets stored on its protocol. Based on daily trading volume, Uniswap is estimated to be the 4th largest cryptocurrency exchange in October 2020. In March 2021, Uniswap estimated that the exchanged passwords generated a daily fee of approximately $2 to $3 million for liquidity providers of money, market-promoting liquidity.
How UNISWAP works
With Ethereum Blockchain, UNISWAP is an automatic liquidity protocol provided by a constant product formula. Since it prioritizes decentralization, censorship resistance and safety, non-reliable mediators must be required. Furthermore, Uniswap is a licensed free software under the GNU Public License (GPL). It means that every pair of UNISWAP Smart Contract manages a liquidity group consisting of two ERC20 token reserves.
Everyone can become a " liquidity provider " by sending an equivalent amount of each token to change the swimming pool token; everyone can become a "liquidity provider". Therefore, these monitor the PRORATA LP shares of the total reserves and can be exchanged for the actual property at any time.
How to use Uniswap
To get started with Uniswap, you need a wallet that supports ERC20, such as MetaMask, Wallet Connect, and Coinbase wallet, Portis or Fortmatic.
These can be traded on Uniswap to pay for gas (also known as Ethereum transaction fees); if you have one of your wallets, you need to load Ethereum. The cost of gas depends on the number of individuals using the network. Most ERC20 compatible wallet providers offer three options: slow, medium, and fast when paying via the Ethernet Blockchain. It's the slowest but most affordable option, the fastest is the highest, and it's in the middle. It controls the speed at which Ethereum network miners execute transactions. Carefully study the steps on how to use Uniswap below.
1. Go to https://uniswap.org
2. Click Use Uniswap in the upper right corner.
3. Go to "Connect wallet" in the upper right and select the Wallet you have.
4. Log in to your Wallet so that you can connect to Uniswap.
5. You will be offered the option to exchange tokens directly using the dropdown options next to the "from" and "to" sections on the screen.
6. Select the tokens you want to redeem, enter the amount, and then click Redeem.
7. The transaction preview window will be displayed. First, you need to confirm the transaction in your ERC20 Wallet.
8. Hold on for the transaction to be added to the Ethereum blockchain. You can look up the progress by copying the transaction ID and pasting it to https://etherscan.io/.
The transaction ID can be used in your Wallet by finding the transaction in the transferred transaction history.
Conclusion & Recommendation:
Uniswap is a cutting-edge concept that has created the most popular decentralized exchange in the crypto industry. Uniswap business diversification and transparent governance are viral among Blockchain enthusiasts, who reject large-scale centralized cryptocurrency exchanges via UNI Coins. In addition, the Uniswap liquidity pool is attractive to investors who want to make money with the Bitcoin they already own rather than selling them.