How to use uniswap?

Why is UNI valuable？

Uniswap's cryptocurrency, UNI, plays a key role in maintaining and operating its network.

Users who hold UNIs help to manage the protocol, voting on proposals that could grow Uniswap and improve its ecosystem.

The Uniswap team created UNI with the idea that the protocol would be owned and operated by its users, who in turn would help it grow into a self-sustainable model.

On September 1, 2020, Uniswap distributed 400 UNIs to each user, thus realizing their vision. They also offered extra token rewards to users who contributed to the liquidity pool. It's worth noting that if a user wants to submit a proposal to the Uniswap network, they must have at least 1% of the total UNI supply in their possession.

Why use Uniswap？

Traders may find Uniswap attractive because of its ability to offer newer and less liquid cryptocurrencies that are not available on traditional exchanges.

When used with exchanges such as Kraken, users can also find arbitrage opportunities in mining pools that experience price slippage due to large transactions.

Additionally, investors seeking access to various projects based on the Ethereum blockchain may also be interested in Uniswap.

To date, various wallets have integrated Uniswap, allowing users to trade cryptocurrencies within their ecosystems.

How does Uniswap work？

Uniswap is an automated liquidity protocol supported by a constant product formula and implemented in a non-scalable smart contract system on the Ether blockchain. It eliminates the need for trusted intermediaries, prioritizing decentralization, censorship resistance, and security. Uniswap is open-source software licensed under the GPL.

Each Uniswap smart contract or pair manages a liquidity pool consisting of two ERC-20 token reserves.

Anyone can become a Liquidity Provider (LP) for the pool by depositing the equivalent value of each base token in exchange for pool tokens. These tokens track a proportional limited partner share of the total reserve and can be redeemed at any time for underlying assets.

Pairs act as automated market makers, standing ready to accept one token for the other as long as the “constant product” formula is preserved. This formula, expressed as x * y = k, states that trades must not change the product (k) of a pairs reserve balances (x and y). Because k remains unchanged from the reference frame of a trade, it is often referred to as the invariant. This formula has the desirable property that larger trades (relative to reserves) execute at exponentially worse rates than smaller ones.

In practice, Uniswap applies a 0.30% fee to trades, which is added to reserves. As a result, each trade increases k. This functions as a payout to LPs, which is realized when they burn their pool tokens to withdraw their portion of total reserves. In the future, this fee may be reduced to 0.25%, with the remaining 0.05% withheld as a protocol-wide charge.

Since the relative prices of the two pairs of assets can only be changed by trading, the difference between the Uniswap price and the external price creates an arbitrage opportunity. This mechanism ensures that the Uniswap price always converges to the market clearing price.

Uniswap users have several options for participating in decentralized exchanges:

• Create a new market: You can create a new market to exchange new pairs of digital assets using smart contracts.

• Exchange assets through existing markets: You can use the Uniswap platform to exchange digital assets through created decentralized markets.

• Provide liquidity and earn rewards: You can provide liquidity by pledging (agreeing not to trade or sell) your digital assets. Those who pledge digital currency on the Uniswap platform will be rewarded with UNI tokens.

• Participate in Uniswap Governance: UNI Token holders have the right to govern the Uniswap platform.

You will need to connect the appropriate digital wallet to use the Uniswap network. Uniswap users will also need Ether (ETH) to cover any transaction fees. They may increase as the Ether platform charges fees for Uniswap transactions.

How to use Uniswap

Starting to use Uniswap is a straightforward process,however, you will need to make sure that you have a wallet setup that supports ERC-20, such as MetaMask, WalletConnect, Coinbase Wallet, Portis, or Fortmatic.

Once you have one of these wallets, you'll need to add Ether to it to trade on Uniswap and pay for Gas - this is the Ether transaction fee. The price of the Gas payment varies depending on the number of people using the network. Most ERC-20 compatible wallet services offer you three options when devising payments via the Ether blockchain: slow, medium or fast. Slow is the cheapest option, fast is the most expensive, and medium is somewhere in between. This determines how fast the Ethernet network miners can process your transaction.

Before you start using Uniswap, you need to prepare a few things. First, you need to install browser extensions or plug-ins to interact with Web 3.0 applications. One of the most common and best supported by Uniswap is Metamask.

How to use Uniswap with Metamask？

• Download the Metamask wallet from metamask.io.First-time users will be prompted to add the extension to their browser.

• Upon doing so, users will have to create a new wallet and write down their Secret Recovery phrase. Write these words down in a safe and secure place, preferably in a hard notebook for safekeeping at home. Do NOT take a photo or a screenshot of your Secret Recovery phrase. Anyone with access to your phone or photos on your computer will be able to swipe your funds.

• Head over to uniswap.org, and click on the pink “Launch App” button in the top-right-hand corner. (Always check that the address is valid. Upon confirming the validity of the address, users should bookmark the ones they plan to return to at a later date.)

• Connect the Metamask wallet to Uniswap.

• Select the desired token for swapping, as well as the token in possession to swap against.

• Input the amount, and click “Swap”.

• Once the swap has been confirmed, the app might prompt users to add the swapped token to the Metamask wallet. This is because Metamask does not automatically show the balance of tokens that have been added. Users are required to add these tokens manually.

How to use Uniswap with Coinbase？

Coinbase's approach may not be as daunting for U.S. citizens already familiar with the platform. First-time users should begin the following steps after successfully opening a Coinbase account. Those who already have an account can start with step 1.

• After downloading Trust Wallet from the mobile app store, complete the setup process.

• As with the Coinbase wallet, users will have to deposit an ERC-20 token into their wallet.

• In the bottom-left-hand corner, the same four squares from the Uniswap app will be visible, representing the DApps explorer.

• In the DApps Explorer, users can search for the Uniswap protocol. Clicking on the protocol will present the user with the swap page.

• From the swap page, users can search for their desired coin. If it's not a popular token, users will have to import it.

• Once the desired amount is selected, users can swap for the desired token.

How to use Uniswap with Trust Wallet？

Trust Wallet is one of the most popular mobile wallets, and for good reason. Trust Wallet is easy to use, user-friendly, and provides users with a range of tools. Here are the steps to use Uniswap with Trust Wallet.

• After downloading Trust Wallet from the mobile app store, complete the setup process.

• As with the Coinbase wallet, users will have to deposit an ERC-20 token into their wallet.

• In the bottom-left-hand corner, the same four squares from the Uniswap app will be visible, representing the DApps explorer.

• In the DApps Explorer, users can search for the Uniswap protocol. Clicking on the protocol will present the user with the swap page.

• From the swap page, users can search for their desired coin. If it's not a popular token, users will have to import it.

• Once the desired amount is selected, users can swap for the desired token.

Uniswap's high fees are a major barrier to new Uniswap users. Since Uniswap exists on the Ether blockchain, it relies on ETH to pay for Gas. Due to the design of Ether, greater congestion leads to higher Gas fees as it intensifies bidding wars between users competing to insert their transactions into the next block first.

To avoid failed transactions, consider going to Uniswap's “Settings”. (Users can do this by clicking on the gear icon.) Before executing a transaction, the user should adjust the slippage tolerance to approximately 12%.

The slippage tolerance is simply the difference between the price at which the transfer is recognized and the price that the seller is willing to accept. Adjusting the slippage tolerance ensures that user trades are run ahead of schedule. Preempting a trade increases the chance that trade will be included in the next block.

How to exchange tokens with Uniswap？

To exchange tokens, select “Exchange” from the main menu. This will open the main exchange screen, allowing you to select your assets from a list. You can also navigate to the “Tokens” page from the main menu and select the assets of your choice or search for them via the main search bar.

For exchanges, just enter the amount of assets you hold or the amount of assets you want to exchange. The app will check to see if you have a sufficient balance. To execute the exchange, simply click on the exchange and follow the steps on the screen to approve the transaction.

Uniswap V3 also provides the option to change some of the parameters of the swap. For example, you can specify the maximum amount of slippage (the amount that is lost or gained due to market fluctuations when an order is executed) and the amount of time a trade should wait.

Uniswap also offers the option to purchase cryptocurrencies using legal tender through third-party payment providers. The availability of this feature and supported payment methods may depend on your jurisdiction.

How to swap tokens with the Uniswap Web app？

To exchange tokens on Uniswap, follow these steps:

1.Open the Uniswap web application and connect your wallet. Then select the Token drop-down list.



2.Search and select the tokens you want to exchange. You can browse the list of tokens or search for tokens by name or contract address.



3.Now you have to select the token you want to swap for. Select the token drop-down.



4.Search for and select the token you wish to swap for. You can browse the token list or search for a token by name or contract address.



5.Enter the amount you would like to swap, receive, or select the “Max” option.

The “Max” option automatically inputs the total amount of the token you have available in your wallet for swapping.



6.Select “Swap”.



7.Review the swap details, and then select “Confirm Swap”.



8.In your wallet, approve spending for the token you are swapping.

This will require a network cost. If this is your first time swapping the token with the Uniswap protocol, then youll need to approve the token to trade it.

For more information on token approvals see our article “What is a token approval”？



9.In your wallet, sign the message. This transaction will not require a network cost.



10.In your wallet, confirm the swap. This transaction requires network costs.



11.Once confirmed, your swap is submitted to the blockchain and is pending.



12.You will see “Swap success” and a green checkmark on the screen when the transaction is completed.



now successfully swapped.

FAQ



1.How do I invest in Uniswap (UNI)？

You can invest in Uniswap by purchasing UNI's. The easiest way to purchase UNI's is through a centralized cryptocurrency exchange such as Coinbase or Kraken. You can also buy UNI through the Uniswap platform using other cryptocurrencies such as Ether.

2.Which wallets are compatible with Uniswap？

Uniswap's UNI tokens are compatible with many digital wallets, including hardware and software versions. Popular software wallets that can hold UNI include Coinbase Wallet and MetaMask Wallet. Hardware wallet options include Ledger and Trezor.13

3.Can Uniswap be hacked？

Uniswap is considered secure as a decentralized exchange using blockchain technology. Smart contracts on the Uniswap platform are designed to be immutable, although smart contract hacking can often occur. The Uniswap platform suffered a massive security breach in 2023 that resulted in over $25 million in losses.14

CoinCodeCap. “ Hackers Make $25.2 Million Using Uniswap Security Breach.”

4.My transaction has been waiting for X hours/day and is not showing up on Etherscan.

Your transaction may have been deleted from the memory pool, which means it may never succeed. To delete this pending transaction, you must reset your wallet and Uniswap If you are using MetaMask, you can reset your account to clear pending transactions. Then, to clear pending transactions from the Uniswap interface, click on your account and select “Clear All” above the list of transactions.

5.My transaction failed. Can I get my fees back？

No. When your transaction fails for any reason, you will permanently lose the gas fees used to pay miners. However, the fees you pay for failed trades are usually lower than the fees you pay for successful trades.