It may come as a surprise to know that one of the biggest threats to cryptocurrencies is the fact that the majority of cryptocurrency trade still happens on centralized exchanges. In the beginning, these exchanges made cryptocurrencies like Bitcoin accessible to the world. However, as time went by, we started noticing issues like an increased risk of hacking, mismanagement, and arbitrary fees. Decentralized exchanges came to the rescue and fixed most of these problems. Recently, you may have noticed an upsurge in the popularity of one particular DEX exchange- Uniswap exchange.
So what makes Uniswap so popular? There are several reasons for it. For starters, the Uniswap’s interface enables its users to swap ERC-20 tokens in a trustless manner. ERC-20 tokens are the most common type of token built on top of the Ethereum blockchain. There are over 180,000 ERC-20 tokens in circulation at this time, and these numbers continue to increase daily. Additionally, Uniswap also solves the problem of liquidity that most decentralized exchanges face. Anyone can swap tokens, add tokens to a pool to earn fees, or list a token on Uniswap. There are no registration requirements for using Uniswap. Its decentralized nature eliminates the hassle of KYC/AML compliance. As a user, the only thing you will require while using Uniswap is an Ethereum wallet such as MetaMask or Eidoo.
Evidently, there are many incentives for choosing Uniswap over its counterparts. Let’s take a deeper look into what it is and how it works.
What is Uniswap Exchange?
Uniswap is a decentralized exchange that was built on top of the Ethereum blockchain. It is completely compatible with all ERC-20 tokens and infrastructure such as wallet services like MetaMask and MyEtherWallet. Uniswap is an open source project. This means that anyone can copy the code to create their own decentralized exchanges. It also allows users to list tokens on the exchange for free.
With Uniswap, users can retain complete control over their funds. This is different from centralized exchanges, where traders will have to give up control of their private keys so that orders can be recorded on an internal database instead of on a blockchain.
Features of Uniswap Exchange
Some of the primary features of Uniswap can be observed as follows:
- Anonymous: You can maintain complete anonymity while using Uniswap. There is no requirement for performing KYC, as all transactions are executed directly from your wallet. The only piece of information that you have to provide is the address of your public wallet.
- Security: Uniswap is extremely secure. In fact, its safety can be compared to that of the Ethereum blockchain itself. This is because the exchange is non-custodial in nature.
- New tokens: Any user is capable of creating and pairing an ERC20 token with ETH to create liquidity for the new pool. From this, it is evident that Uniswap grants you immediate trading access to new tokens.
- Low fees: Most centralized exchanges charge 0.5 % or more per trade. On the other hand, Uniswap users are charged a nominal fee of 0.3% per trade.
- Trustless: Users are given complete control of their tokens and can exchange them directly with the liquidity pools. This is completely different from centralized exchanges, where you will have to give up control of your private keys.
Guide to using Uniswap Exchange
If you’re looking to add tokens on Uniswap, you can follow these steps-
- Step 1: First, navigate to the Uniswap exchange.
- Step 2: Next, click on the “Select a token” button.
- Step 3: In the “Search name or paste address” box, paste in the contract address of the ERC-20 token you would like to list.
If you want to swap tokens on Uniswap, these are the steps that you will need to follow-
- Step 1: On the Swap tab, choose the amount of ERC-20 tokens you want to swap.
- Step 2: Choose the token you want to swap to by clicking the down arrow under “To”.
- Step 3: A list will appear and you can choose the token you want to swap to, or if your token is not on the list you can paste the address of the token.
- Step 4: Uniswap will display an estimate of how many tokens you would receive after the swap. To confirm, click “Swap”.
- Step 5: If you need to adjust slippage tolerance and transaction time, click the “setting” button on the up-right corner.
If you want to list a DeFi token on Uniswap, you will need to create an exchange first, so that Uniswap knows about your token. After this, you will have to add liquidity. You can follow these steps to complete these two tasks-
Create an uniswap exchange
- Step 1: Go to https://uniswap.exchange/
- Step 2: Connect with your MetaMask Wallet.
- Step 3: Select the “Pool” option on the upper right corner of the screen.
- Step 4: Select “Create Exchange”
- Step 5: Press the “Select a Token”option.
- Step 6: Enter your token’s address in the “Search Name or Address” field. Now select your token from the dropdown.
- Step 7: Click on the “Create Exchange”option.
- Step 8: A pop-up will show up. Click on the “Confirm” option.
- Step 1:Click on the dropdown on the same page and press “Add Liquidity.”
- Step 2: Put in the amount of ETH you wish to deposit.
- Step 3: Now select the “Select a Token” option.
- Step 4: Enter your token’s address in the “Token Address” field and select your token from the dropdown.
- Step 5: Press the “Unlock” option. You’ll find it next to your token symbol.
- Step 6: Click on “Confirm” once the pop-up shows up. Your transaction will be confirmed.
- Step 7: Now, in the same way, enter the amount of your tokens you wish to deposit. Make sure to check the calculated exchange rate.
- Step 8: Now, select the “Add Liquidity” option and click “Confirm” once the pop-up shows up.
Uniswap can go a long way in helping us build a trustless financial system. It is one of the largest decentralized exchanges in the market today and is extremely easy to use. The protocol enables developers, liquidity providers and traders to take part in a financial marketplace that is open and accessible to all.