Uniswap is the most popular Decentralized
Exchange to buy and sell Ethereum based tokens. On centralized exchanges like
Coinbase, Binance, or Kraken or anywhere where you create an account and
you have to verify your identity to trade cryptocurrency – you are at their mercy to accept
you in their system, enable your account and give you access to their system. Everything
is centralized under that one company. But with Uniswap you have none of that. You just
hop on the website, you don't need an account, just a wallet with some Ethereum
and you start buying and selling.
Anyone can trade on Uniswap because there are
no restrictions. No matter where you are in the world, no matter how much crypto you have, you
don't have to verify your identity to anyone. While there are a lot of positive things about
that, there are some negative ones as well. For example, there's no support team to ask for
help. Also, the fees are higher because you are interacting directly with the blockchain so there
will be considerable fees for every transaction. In the following minutes, I'm
going to explain everything so you know exactly how to use Uniswap like Pro.
Watch until the end for the tips and tricks. To get started get to Uniswap.org Here you'll find out more about
the project and how it works. Since the dark mode was invented, that's my go-to choice on all my
devices. It's so much easier on the eyes! Click on Launch App and you'll
be redirected straight to the Exchange platform on app.uniswap.org Always make sure you are on the right
website when using crypto services. What you see here is the whole interface we are going to work with.
charts, no crowded numbers. Let's say I want to exchange 1 ETH for
the DPI token which I covered in one of my previous videos. That was a good pick,
by the way, it already doubled in price. To select the token I want to buy I'll click
on Select a token and then search for it. Remember you won't find Bitcoin here, Polkadot, Cardano or anything else that's not
on the Ethereum blockchain. Well, you can find Bitcoin but only as Wrapped BTC,
which is an Ethereum token pegged by BTC. Anyway, I can find LINK,
BAND, or CEL. But not DPI. That's because not all Ethereum coins are
listed here. You can actually change the list of tokens that appears in the search feature
and choose something else.
Like CoinGecko, for example. Now you can see that CoinGecko covers
the DPI token so it will appear on the list. But some really new coins won't appear either
way. So the safest way to find the coin you are looking for is to paste the official
contract list of that particular token. This is very important because
since Uniswap is open to everyone, there are a lot of scam tokens out there so you
must be sure you are trading the correct one.
What I usually do to find the correct
contract address is this. I go to CoinGecko. I search for the token I'm interested in
and copy the contract address from here. To be extra safe you can click on Etherescan and you can see the same contract address
directly on the blockchain explorer. Copy that and go back to Uniswap and
paste in the address you just copied. It will find your token by address
and you just have to click on Add.
Click on the token and
you'll be able to swap to it. But before we continue, the
button will say 'Connect Wallet'. Like I said in the beginning, all you
need to have to use this exchange is a wallet with some Ethereum. You
can have other tokens as well, but you'll need Ethereum to
pay for the network gas fees. So go ahead and click on 'Connect Wallet'.
You can also click on 'Connect to a wallet' in the top right corner of the website. The most popular wallet used with
Uniswap is Metamask. But you can connect other wallets as well, like Trust
Wallet and Atomic Wallet via WalletConnect, or a Coinbase Wallet. Remember, the
Coinbase Wallet and Coinbase app are 2 different applications. You will need
the Coinbase Wallet to connect with Uniswap. You can also connect your hardware wallet
so you can swap between coins without your funds ever leaving your hardware device.
That's possible through MetaMask and I'm going to link to my MetaMask guide in the
description and at the end of this video.
I'm going to continue by
connecting my MetaMask wallet. A popup opened up and I'm going to select
one of the accounts I was to use on Uniswap. I'm going to allow the
permissions and click on Connect. Now the button says Insufficient
ETH balance because I don't have 1 ETH in my wallet and I can only trade what I own. When I click on MAX it will fill in the
box with the maximum amount I can trade. Also, you can see how much
DPI I will get in return. Below the Swap button, you can see
what's the minimum amount of DPI I can receive based on my settings. The price is
not guaranteed, because of the price volatility, but you know what's the minimum
amount you are going to receive. For some tokens, there isn't
a dedicated pair on Uniswap, or not enough tokens to provide the best price, so Uniswap will try to find the best swaps for
you to get the coins at the price you agreed on.
To go on with the transaction you
will click on the button that says 'Swap' then Confirm Swap on the popup.
Remember that the output amount is only an estimation, but there's a minimum you will
receive otherwise the transaction will revert. If everything looks fine, click on Confirm
Swap and a MetaMask popup will appear. I told you in the beginning that there are
negative sides of these decentralized exchanges that are working on the Ethereum blockchain.
For example, the fees. And for this transaction, the fee is almost $12. The fee is not based on
what swap you make or the amount of cryptocurrency you are trading.
It's based on the price
of Ethereum and how busy the network is. Sometimes the network is less
crowded and it will cost less. Other times it will be busier
and it will cost much more. In this case, I said I want to
trade my whole amount of Ethereum so I can't cover the fees. I will
have to go back and lower the ETH amount so that there's still some
in my wallet to pay the gas fee.
I am able to lower the gas fee to whatever
amount I want. I do that by clicking on EDIT in the MetaMask popup and there are 3 options
presented to me: Slow, Average, and Fast. If I pick Slow there's a big chance
my transaction won't go through and my swap will fail. If that happens, you will
receive your funds back, except for the amount you paid for fees. In this case, I will lose up
to $12 if the transaction doesn't go through. If your transaction fails it
will look something like this. In this case, the fee was too low to
be confirmed in time on the blockchain so it expired. Luckily the fee on
this transaction was only $0.43 If you select Average, that should be
good enough. The Fast option should confirm the transaction right away.
But if you are in a rush and want top priority you would go on a site like
ethgas.watch and check the latest gas price. Pick the instant Gwei amount, even bump
it up 10% and then go to the Advanced tab in MetaMask.
Right down your desired Gwei
price and click Save. This will increase the maximum fee that you are going to pay for the
transaction, but you will have top priority. When you're ready click confirm and wait
for the transaction to be confirmed on the blockchain. If you chose a high transaction
fee this should happen almost instantly. There are a few tweaks that you can make for
your Uniswap transactions. For that, you'll have to click on the cogwheel in the top-right
corner and this settings box will show up. The slippage tolerance is how much of a price
change you are willing to accept while your transaction gets confirmed. If it's set to
0.5%, then if the price goes up more than 0.5% and your transaction is not yet confirmed, then it will be canceled. I like to set this
to at least 2%, but it's your personal choice. In case you want to buy a token
that was just released on Uniswap and everyone wants to buy it at the same
time, changing this to 10%, 20% even 49% is not uncommon. That means you are
willing to buy the token no matter what, even if the price goes 49% higher while
your transaction is still being confirmed.
This setting, along with an increased
transaction fee should guarantee that your transaction doesn't fail even if there are
thousands of people buying at the same time. But for most swaps, anything between
0.5% and 2% should be more than enough. On the other hand, if you want to cut on fees,
but still want to make a swap, you can change the Transaction deadline. By default, this is
set to 20 minutes. If the transaction doesn't go through in 20 minutes it will be canceled
and you will lose the gas fee that was paid. But if you are not in a rush and want to set
a slow transaction fee, you can set this to 60 or more minutes. But I'll have to repeat
myself, if the transaction fee is too low and it's still not confirmed until the deadline,
it will fail and you'll lose the gas fee paid. The expert mode will allow you to
bypass any confirmation popups and allows high slippage trades and
should be used at your own risk.
And you can also turn Dark
mode On and Off from here. I'll set a high slippage tolerance to see how that
looks like on the swap interface. If I set it to 49%, there's a warning saying that the transaction
may be front-run. This means there could be an automatic bot watching my transaction and profit
from it by forcing me to buy at the worst price. It's a possibility, but there's always a higher
risk when buying with a higher slippage tolerance. You can see now on the swap interface
that my slippage tolerance setting appeared above the swap button.
Also, below the
button, you can see the minimum received. Since I agreed on a high slippage tolerance, the
minimum received is now down to 0.4166 DPI. It means that for this transaction I would
receive anything between 0.4166 and 0.62 DPI But I'll set my slippage to 2%. Every time you want to trade a token
that you didn't trade before on Uniswap, you will have to approve trading it
first. Instead of the Swap button, you'll have the Approve button which you'll have
to click in order to go through with the swap.
A new MetaMask popup will appear which will
ask for permission, to allow trades with that token on Uniswap. This is subject to network fees
that you can edit just like I showed you before. You won't be able to make transactions with
the token until you submit this for approval. After your approval transaction is confirmed,
your Swap button will appear as normal. In this case, the swap button appears
in red and says 'Swap Anyway'. That's because of the high Price Impact.
SOLVE/ETH pool is not big enough on Uniswap, so to complete my transaction, I will have to accept a 12.37% loss. If I'm ok with that, I'll click on Swap Anyway.
Otherwise, I can just lower the amount I want to swap and
the Price Impact will go down. We can make all these swaps here on Uniswap
because people from all over the world are providing liquidity. Since
this exchange is decentralized, it means that everyone can contribute with their
own tokens and earn their share of the fees paid by the users of the platform. You'll have to
lock your own tokens on Uniswap and for that, you'll earn a 0.3% fee on all trades
proportional to your share of the tokens.
I'll cover this functionality in another video
and I will add the link in the description below when that's done. But until then you should
watch this video on how to use MetaMask safely and how to use your hardware wallet
on Uniswap. I'll see you there..