Uniswap — it’s, first of all, a fully decentralized protocol for exchanging tokens on Ethereum. Anyone can exchange ERC-20 tokens quickly. The market creators set the exchange rate, which changes during the course of trading, thanks to the Uniswap mechanism.
Contents:
- About the Uniswap platform
- Why is it worth using this dapp?
- How does Uniswap work?
- What innovations will be introduced on the blockchain platform?
About the Uniswap platform
Uniswap doesn’t have its own token. Moreover, all fees (0.3% per transaction) are added to the corresponding liquidity pool. Thus, all fees go to the liquidity providers. As a result, they can deposit or withdraw their funds at any time. For more information, learn a White Paper document.
The main functions of the exchanger:
| Operation | Swap | Send | Pool |
| Actions to be taken | input/output, token selection | input/output, token selection, recipient address | add/remove liquidity, deposit, token selection |
Moreover, with large changes in prices, the liquidity providers suffer "intermittent losses". Losses decrease as prices return to their level at the time of liquidity delivery. With a sufficient trading volume, the earned fee amount can compensate for this loss.
Why is it worth using this dapp?
The main advantage of the platform - a quick and efficient exchange. In addition, the formation of a trading pair doesn’t require filling out a form on the website. Instead, users are free to create trading pairs with ETH as a backup token. This improves decentralization. To use the platform, just connect a wallet. As you have added the wallet, you can start changing ETH and other tokens in any direction.
Characteristics:
- support for any ERC20 token;
- exchange of any ERC20 to any ERC20 token in one transaction;
- trade and transfer to another address in one transaction;
- the lowest cost of gas, compared with any exchange;
- support for private and user exchanges;
- the ability to buy ERC20 tokens from any wallet, using ENS;
- is optimized for mobile devices.
Uniswap - an open source project. Also, all the functions of the smart contract are publicly available.
How does Uniswap work?
Firstly, Uniswap consists of the series of ETH-ERC20 exchange contracts. There is exactly one exchange contract for each ERC20 token. Secondly, if the token doesn’t have the exchange yet, it can be created by anyone, who uses the contract.
Since ETH is a common pair for all ERC20 exchanges, it can be used as an intermediary. This allows you to make direct transactions in one transaction. Users can specify the recipient address if they want to receive purchased tokens at an address, different from the one, used to complete the transaction. Uniswap - an open source platform, designed to improve interoperability with the smart contracts.
h2 id="top4">What innovations will be introducedon the blockchain platform?
Uniswap is preparing to publish the second version of the protocol with many improvements in the second quarter of 2020. Uniswap V2 will support pairs with ERC20 standard tokens, it will have instant swaps and a more accurate prediction of assets’ prices. Already, developers are testing the second version of the protocol, although they don’t plan to stop the first version. The protocol will be able to exchange any ERC20 tokens. In the first version, all exchanges have passed through ETH, and in the new one, tokens will be exchanged directly if there is a corresponding trading pair.
Another innovation will be the protocol fee. At the start, it will be 0, and the fee of the liquidity provider will be 0.3%. In the future, the protocol fee will be 0.05%, and the fee of the liquidity provider will decrease to 0.25%. This will allow the protocol to support developers.