Max E.Tue, Nov 9, 2021 4:03 PM
Uniswap Review: Everything You Should Know Before Using DEX
The Uniswap DEX is based on smart contracts and has a public, open front-end client. Uniswap allows users to exchange ERC20 tokens for Ethereum (and vice versa). Exchange users can make their own contribution to liquidity pools, receiving fees for this.
Any ERC20 token, including ETC, can be exchanged on Uniswap without intermediaries. In addition, the platform has its own UNI token for internal use. At the time of writing this Uniswap review, UNI is ranked 15th in terms of market capitalization according to the CoinGecko resource. Uniswap has been successfully listed on various crypto platforms, including Binance, Huobi Global and OKEx.
How does Uniswap work?
Trades on Uniswap are instant, with clients not even needing to register and be verified. All activities on the site take place without the supervision of any centralized authority. It was possible to implement such a scheme using smart contracts and liquidity pools. Thanks to smart contracts, all transactions on the exchange are carried out automatically without the participation of people.
The second pillar of Uniswap is liquidity pools that allow clients to receive rewards when depositing funds. Assets can be either deposited or taken out at any time from each ERC20 exchange contract. Adding ERC20 tokens is impossible without crediting the equivalent value of the ETH. To calculate the required amount in the ETH, you can use the official Live Exchange service.
The user needs to specify the amount of ETH for the deposit, and the program will immediately show the equivalent in ERC20 tokens according to the current exchange rate included in the contract. After such a swap, a separate commission is charged. This amount is then distributed between liquidity providers – not equally, but depending on the size of the deposit of each participant in the transaction.
When depositing virtual assets, you need to add coins equivalent to the amount of your deposit to the liquidity pool. They will determine your share of participation in the pool. For example, if you want to enter the ETH/USDT pool, then you will need to deposit an equivalent amount in ETH and USDT into it. You can check the number of your liquidity tokens using the Etherscan service.
How To Connect A Wallet And Start Trading On Uniswap
The good thing about Uniswap is that you can work on it without mandatory registration – in this regard, it is similar to traditional crypto exchanges. To get started, you need to perform a number of simple actions:
- Go to the page https://uniswap.org/;
- In the upper right corner, click on the "Launch App" button;
- Synchronize your personal Ethereum wallet with the exchange interface.
To do this, you need to click "Connect to a wallet" and then select one of the proposed wallets.
One of the most popular options for work on Uniswap is the MetaMask wallet. To connect MetaMask to Uniswap, follow these steps:
- Install the MetaMask extension in your browser;
- Launch MetaMask and select the "Create a new wallet" option;
- A mnemonic phrase will be generated for you, which you will need to remember and save in a safe place. The same applies to your wallet password.
When your Uniswap wallet is ready, connect it to the site with a simple click on the "Connect to a wallet" option, then fill in the password or perform synchronization to unlock the wallet ... After completing this procedure, your balance and address will appear in the upper right corner of the Uniswap interface now you can perform transactions on the exchange.
By default, the service will offer you to work with ETH ("From" line), but nothing prevents you from choosing any other token from the available ones. MetaMask supports all ERC20 tokens. In order for the token to appear in the interface of your wallet, you need to add it there manually. To work with ERC20 tokens, you must select the Ethereum Mainnet.
Standard ERC20 tokens will be available on the Ethereum Mainnet. To add BEP20 tokens, you will have to use a custom (advanced) search. After choosing a token, it is enough to indicate the desired amount (to receive), and the program will calculate the amount of the transaction. If the terms of the deal suit you, then you can safely make an exchange.
Advantages of Uniswap
Lack of Verification
Uniswap customers do not need to verify their identity to use site services. Regardless of your activity on the exchange and the volume of trading, no one will ever ask you to show scans or photos of identity documents. The platform uses smart contracts and attracts users by the lack of total control from the administration.
There is no registration on Uniswap as a given, there is no system with accounts and personal accounts at all.
Unlike traditional exchanges, on Uniswap you do not have to spend a lot of time executing orders. All operations are carried out almost instantly. The exchange speed depends only on the size of the commission, which is then distributed among the participants in the liquidity pool.
Huge Selection of Tokens
The number of options available for exchange significantly exceeds competitive offers. Since you can list any token, new coins often appear here that have not yet reached the major exchanges.
Even beginners will have no difficulty in understanding the principles and mechanisms of Uniswap. Deals on the exchange are completed in a couple of clicks.
Disadvantages of Uniswap
Even with all of the above advantages, Uniswap cannot be called an ideal service.It has a number of drawbacks that cannot be ignored.
- Too expensive exchange (in certain cases)
- The procedure involves smart contracts that require more gas (currency to pay for transactions in the Ethereum blockchain) compared to conventional translations. Usually, you have to pay for a deal in the region of $ 5, but if the Ethereum network is overloaded, the price can exceed several tens of dollars.
- The need to develop a strategy.
- It is necessary to accurately determine the set of tokens, as well as the volumes and investments.
- You can add any token to the platform, which is often used by cybercriminals and all sorts of fraudsters. Their favorite technique is to list coins with a similar ticker so that inattentive investors buy fakes instead of the original.
- It is not very profitable to conduct transactions with large volumes of cryptocurrency on Uniswap due to the mechanism bonuses. But trading in small amounts is flourishing here.
Uniswap is a new stage of cryptocurrency evolution. It works in a decentralized manner and successfully copes with its tasks. It is easy to use, works flawlessly, and offers a huge selection of tokens. But at the same time, Uniswap generously absorbs the resources of the Ethereum network and, in general, requires a more balanced approach for successful work, especially when comparing the project with other cryptocurrency exchanges.
Is Uniswap any good?
If Ethereum 2.0 is successfully deployed, Uniswap will attract new users who were previously discouraged by high fees. For people who are confident in the potential of the DeFi sector, it makes sense to use Uniswap.
Is Uniswap safe to trade on?
Despite being hacked in April 2020, Uniswap is considered a very secure crypto exchange. Uniswap is a peer-to-peer exchange network where traders simply swap assets from their personal wallets.
Can I get scammed on Uniswap?
Due to its popularity, Uniswap attracts scammers. There are no criteria for listing a cryptocurrency – anyone can make a listing of a certain token on the platform. This frees the hands of fraudsters. To spot the fraudulent projects it is advisable to pay attention to the following parameters: the development team; smart contracts and code audits; token distribution, contract addresses, and transactions; project plans and social media presence.
Is Uniswap app safe?
Security is one of the advantages of Uniswap: user funds are never transferred to a third party. In addition, there is no counterparty risk as both parties trade directly from their wallets.
Why is Uniswap so expensive?
Uniswap has no control over gas charges caused solely by the congestion of the Ethereum network. Gas charges are the main reason for the high fees on Uniswap. This issue can be resolved with the full launch of Ethereum 2.0.
Can US citizens use Uniswap?
US citizens are free to trade on Uniswap as it is an American platform. However, they must independently assess the possible risks associated with their citizenship or place of residence.