The Uniswap Protocol is already on several blockchains, like Ethereum, Polygon, Arbitrum, Optimism, Binance Smart Chain, and Celo. The Uniswap protocol is a peer-to-peer1 system designed for exchanging cryptocurrencies (ERC-20 Tokens) on the Ethereum blockchain. As of today, the Uniswap Protocol is the fifth largest application on Ethereum with over $4 billion in the best cryptocurrency exchanges to trade with total value locked (TVL). The protocol consistently does billions in weekly trading volume and is the most popular decentralized exchange by volume on Ethereum mainnet, Polygon, Arbitrum, and Optimism. Permissionless design means that the protocol’s services are entirely open for public use, with no ability to selectively restrict who can or cannot use them.
- Uniswap Governance offers grant funding for people who are building apps, tools, and activities for Uniswap Protocol users, builders, and community members.
- The Uniswap Protocol is not controlled by a single entity, but rather a community of individuals and organizations is responsible for stewarding the world’s biggest AMM protocol.
- Unlike traditional order book exchanges where a buy order is matched to a sell order, Uniswap uses an automated market maker (AMM) system.
- Anyone who has traded stocks through brokerage firms will be familiar with an order book system.
- When a token is withdrawn (bought) from a pool, a proportional amount must be deposited (sold) to maintain the constant.
The advantages and disadvantages of Automated Market Makers versus their traditional order book counterparts are under active research by a growing what is exponential moving average in trading number of parties. We have collected some notable examples on our research page. The protocol is also immutable, in other words not upgradeable.
Liquidity refers to how much of an asset is available to trade. The Uniswap Protocol relies on third parties to supply liquidity. These liquidity providers (LPs) are users who deposit tokens into a liquidity pool to provide liquidity for a particular token pair that swappers can trade with. In return for providing liquidity, LPs earn trading fees generated by the pool. Anyone can become a liquidity provider, a transformative change to participating in financial markets. Unlike traditional order book exchanges where a buy order is matched to a sell order, Uniswap uses an automated market maker (AMM) system.
This additional approval is an extra layer of security to protect your funds. It is one of the most popular ways to exchange with the Uniswap Protocol. Uniswap Governance offers grant funding for people who are building apps, tools, and activities for Uniswap Protocol users, builders, and community members. Uniswap Labs is a company that develops software products that work on top of the Uniswap Protocol. Uniswap Labs was founded by Hayden Adams, who developed the Uniswap Protocol. Uniswap Labs builds and maintains products like the Uniswap web app, NFT aggregator, and Uniswap mobile wallet.
Mine Liquidity
V3 is open source with slight modifications, which are viewable here. Each version of Uniswap, once deployed, will function in perpetuity, with 100% uptime, provided the continued existence of the Ethereum blockchain. Participate by proposing upgrades and discussing the future of the protocol with the Uniswap community. On a limited set of token pairs, Uniswap Labs charges a flat fee of 0.15% to sustainably fund our operations.
Learn how to integrate with Uniswap by building a dApp through guided examples. The Uniswap protocol takes a different approach, using an Automated Market Maker (AMM), sometimes referred to as a Constant Function Market Maker, in place of an order book. Vote on official Uniswap governance proposals and view past proposals. Select the ‘Select a token’ icon and browse the list to find your token.
There is no bidding or order book, just the price based on how much liquidity is available. When users want to make a swap, they input the amount of cryptocurrency they want to swap in and receive a number of tokens in exchange. The Uniswap Protocol is the largest decentralized exchange for swapping cryptocurrency tokens on Ethereum and other popular blockchains. Launched in 2018, it is the world’s largest and most popular decentralized exchange, with over $1.8 trillion in trading volume and 350 million swaps.
For new features implemented in V3 that expand and refine the AMM design, see the V3 Concepts page. To begin, we should make clear the distinctions between the different areas of “Uniswap”, some of which may confuse new users. After confirming your trade, you’ll need to wait for the Ethereum network to process the transaction. Swaps are often completed within seconds but can take longer if the network is busy.
You can also search by token name or token contract address. Once you’ve connected your wallet, you can choose which network to swap, like Ethereum, Polygon, Arbitrum, Optimism, or others. To start using Uniswap, you’ll need to connect your Ethereum wallet to the platform. Uniswap supports a range of wallets, including the Uniswap Wallet, Metamask, Coinbase Wallet, and WalletConnect. The total amount of both tokens should always balance out so that K experiences no change. Explore these guided tutorials to get started integrating with Uniswap in your dApp.
When a token is withdrawn (bought) from a pool, a proportional amount must be deposited (sold) to maintain the constant. The ratio of tokens in the pool, in combination with the constant product formula, ultimately determines the price of a token. The Uniswap Protocol is one of crypto’s safest and most secure protocols. The protocol has processed over $1.5 trillion in trading volume over hundreds of millions of transactions without incident. All contracts have been audited by world-class professional security teams. If this is your wallet’s first time trading this token with the Uniswap Protocol, you need to approve the token first.
You can buy or sell one token for another based on the current exchange rate. Additionally, you’ll see a network fee, which is the gas cost you can expect to pay to perform the swap. The Uniswap Protocol uses a constant product formula to determine the price of an asset.
Integrate with Uniswap
No party is able to pause the contracts, reverse trade execution, or otherwise change the behavior of the protocol in any way. It is worth noting that Uniswap Governance has the right (but no obligation) to divert a percentage of swap fees on any pool to a specified address. However, this capability is known to all participants in advance, and to prevent abuse, the percentage is constrained between 10% and 25%. Learn about the architecture of the Uniswap Protocol smart contracts through guided examples.
How to get started with Uniswap
Explore these guided tutorials to get started integrating with Uniswap in your smart contracts. Anyone who has traded stocks through brokerage firms will be familiar with an order book system. Once you’ve chosen the tokens you want to trade, you can enter the amount you want to trade.
The second departure from traditional markets is the permissionless and immutable design of the Uniswap protocol. The Uniswap Protocol is not controlled by a single entity, but rather a community of individuals and organizations is responsible for stewarding the world’s biggest AMM protocol. Users and organizations that hold UNI can use it to vote on decisions related to the Protocol. Decentralized exchanges (DEXs) like the Uniswap Protocol offer several benefits over traditional centralized exchanges (CEXs). Key benefits include decentralization, self custody, transparency, improved liquidity, and greater accessibility.
Unlike traditional exchanges, decentralized exchanges are unique because they allow users to swap tokens without third parties facilitating the transaction or taking control of funds. Swapping on the Uniswap is completely self-custodial, which means you always retain control of your assets — and no third party can take or misuse your funds. The Uniswap Protocol is a decentralized marketplace to swap cryptocurrencies on the Ethereum blockchain. It exists as a set of persistent, non-upgradable smart contracts. The Uniswap Protocol’s code cannot be changed or modified and will run as long as the blockchain is functional, even if Uniswap Labs disappears tomorrow. Anyone can deploy the Uniswap Protocol contracts on any blockchain.
How does Uniswap work? Understanding automated market makers (AMM)
Anyone can swap, provide liquidity, or create new markets at will. This is a departure from traditional financial services, which typically restrict access based on geography, wealth status, and age. At a very high level, an AMM replaces the buy and sell orders in an order book market with a liquidity pool 5 the ioc container of two assets, both valued relative to each other. As one asset is traded for the other, the relative prices of the two assets shift, and a new market rate for both is determined. In this dynamic, a buyer or seller trades directly with the pool, rather than with specific orders left by other parties.
