What is Uniswap and how to work on it? Decentralized crypto exchange Uniswap is at the limits of popularity The platform ranked first on the Etherium network in terms of gas spent and resource consumption in general Just Uniswap is the root cause of the high cost of gas and large commissions in the Etherium network but strangely enough, the platform has more and more fans. People aren't just trading coins on Uniswap they're revolutionizing decentralized finance The trading volume of this site exceeds $1 billion which makes it much more popular than all the other decentralized exchanges and most CEX, too The exchange confidently occupies the top list of the most popular crypto-exchange sites on the entire planet. Uniswap has around 300,000 users that's the site's rabid popularity Uniswap is a decentralized exchange based on the Etherium network that allows anyone to exchange their tokens from the Etherium network among themselves Moreover, there is no registration or KYC procedure usual for other crypto-exchanges The platform was created by Hayden Adams, influenced by Vitalik Buterin. Uniswap was created to solve the problem of lack of liquidity, a problem faced by many crypto exchanges.
Liquidity itself is the ability to sell or buy any volume of coins without affecting the price For example, you want to buy 100 ethers at $2,000 on a classic crypto exchange You create a buy order, then the exchange looks for you a counterparty – a seller of hundreds of ethers. If there is no such seller, the bid will go into the bid stack, and the price may well shoot well above your buy price – that's the mechanics of the market.
Uniswap has no such thing – the crypto exchange itself is a market maker and creates the market itself. This is a unique technology that is likely to become the standard for all financial markets on the planet. You can buy tokens at any time and in any quantity. How Uniswap works How can you achieve that trades on all pairs are executed instantly, the entire process is decentralized, and those who want to exchange tokens do not even have to register? There are two main elements of the exchange smart contracts and liquidity pools. Let's take a look at what these are Smart contracts are programs on a blockchain with a specific algorithm. The algorithm is executed one at a time, under certain conditions, and without a hitch.
In our case, the algorithm changes tokens. This, by the way, is the reason why transactions take more gas than a simple transfer. An exchange is more expensive than a normal transaction. And sometimes the exchange can be more expensive than even thirty dollars. This, of course, is crazy, but so far there is no way to solve this problem. But thank God, this happens very rarely. Usually it costs about four dollars to make an exchange. If the price is around ten, it means that the Etherium network is under load at the moment. Now about liquidity pools. The notion of a liquidity pool refers to a certain reserve of tokens in a smart contract that allows exchange transactions. It's like a cash register in an exchange. One of the key features of the exchange is the requirement for an equilibrium amount of tokens that make up the liquidity pool of the pair If a coin developer is going to fill the liquidity pool with only his tokens, the exchange will deny him the placement.
It is necessary that the reserve in tokens and the coin pool of the pair traded to him are equal. It turns out that if some ZLAT/ETH is traded, the developer must add the same amount of ZLATs and Ethers to the liquidity pool. There is no other way. This insures the exchange from sharp price fluctuations and price shoots up or down. It turns out that the liquidity pool should always be in balance, demand should always be equal to supply. If demand is higher than supply, the liquidity pool must receive more tokens sold to bring the system into equilibrium. Participants in the Uniswap system There are two parties on the Uniswap platform – token buyers and liquidity providers. The former connect wallets, make a coin selection, specify the volume, put up gas, conduct the transaction and receive the coins. And liquidity providers enable the exchange, and make money from it. To make money as a liquidity provider, you have to give a certain amount of coin, and ethers, at the rate of the site. Liquidity providers earn on commission. They get 0.3 percent of the trading volume from each transaction.
This is an incentive to be a market maker. Pros of the Uniswap platform The platform has several major pluses. Here they are: – There's no need to go through the identity verification process. No matter how cool you are to trade huge volumes of trades, you won't have to show your credentials. The system works without the involvement of people and regulatory bodies. That's why this is a big plus for the platform.
A true anonymous crypto exchange. – There is no need to register – create an account, sign up for email, remember or write down a password. There are no accounts in this crypto exchange. You will need to remember the password only from your MetaMask wallet. – Instant Swap. You don't have to wait for the execution of your order. The exchange will be made by a smart contract almost instantly. – A wide choice of coins. Any coin can be poured into Uniswap. That's why coins appear here faster than on large crypto exchanges, which means there's a chance to earn a lot of X's. After all, prices on Uniswap react to listings on centralized exchanges with rapid growth. – Ease of use. Everything is intuitive. If you've used a cryptocurrency wallet at least once, you won't have any problems.
Our conclusion on Uniswap Uniswap is a new milestone in the development of exchanges. And not only cryptocurrency exchanges – it's possible that centralized fiat exchanges will also work like this. The platform is fully decentralized, and perfectly performs its task. The base of exchange members is constantly growing, experiencing a real boom. The exchange works fine even with the huge influx of people, and no failures in the work have been observed. Its only disadvantage is a powerful waste of resources of the Etherium network. But these problems will be solved. All in all, Uniswap is an excellent platform that gets a solid plus from us! .