What is Uniswap?

Uniswap is a fully decentralized on-chain protocol for automated token exchange on Ethereum that uses liquidity pools instead of order books.

How Does Uniswap Work?

Sources: https://uniswap.io/ | https://defipulse.com/uniswap

Uniswap offers:

→ A simple smart contract interface for swapping ERC20 tokens

→ A formalized model for pooling liquidity reserves

→ An open source frontend interface for traders and liquidity providers

Anyone can quickly swap between ETH and any ERC20 token or earn fees by supplying any amount of liquidity. Anyone can create a market (i.e., liquidity pool) by supplying an equal value of ETH and an ERC20 token. Uniswap allows only one market per ERC20 token. The market creator sets the exchange rate, which shifts through trading due to Uniswap’s “constant product market maker” mechanism. When trading reduces one side of the pair’s liquidity relative to the other, the price changes. This creates arbitrage opportunities, encouraging more trading.

Uniswap has no native token, but each liquidity pair is represented by a unique, freely-transferable ERC20 token. All fees (0.3% per trade) are added to the relevant liquidity pool; thus all fees go to liquidity providers in proportion to their share of the pool’s liquidity. Liquidity providers can add to or withdraw their funds at any time.

With larger price changes, liquidity providers suffer an “impermanent loss.” The loss diminishes as prices return to their level at the time liquidity was supplied. With sufficient trading volume, fees earned may offset this loss.

How Do I Start Trading OTO on Uniswap?

Visit https://metamask.io/ and install the MetaMask extension for your browser (Chrome, Firefox or Brave). See MetaMask for more information.

Alternatively, mobile users can trade on Uniswap using Trust Wallet.

Start trading OTO on Uniswap.