Uniswap beginner’s guide: How to trade and provide liquidity

Therefore, Expert mode really is only for experienced traders who are sure they can turn a profit from a trade, despite the unrealized losses they may make on the initial swap. Slippage occurs when the price you have opened a trade at, or wish to swap assets for, isn’t available anymore 5 using python on a mac python 3 10.7 documentation at the time of the execution of your order. This can happen for a number of reasons, especially in periods of high market volatility when many other users are trying to buy into a token – prices move quickly. To begin adding liquidity on Uniswap V3, open the Uniswap web app and navigate to the “Pools” section. Let’s look at an example of an ETH/DAI liquidity pool to explain how it works.

Uniswap went live on the BNB chain after receiving 66% support from governance voters. This move can potentially provide users with more efficient and cost-effective trading options. It also means Uniswap users will be able to take advantage of BNB Chain’s high speed and low transaction fees. Additionally, the integration allows Uniswap to tap into a new pool of liquidity and increase awareness and adoption among both retail and institutional investors. This occurs as there is now less ETH in the pool after the transaction and we know that the total liquidity of the pool (k) must remain constant; this mechanism determines that the price of ETH will be k/x.

UNI tokens can be bought and sold on various cryptocurrency exchanges, so traders can use UNI tokens to trade for other cryptocurrencies or to participate in decentralized finance (DeFi) applications. Do note that new use cases may emerge through community requests and governance votes. Uniswap v2 was launched in 2020 and brought several improvements to the first version. One of the most significant changes was the introduction of ERC-20 to ERC-20 pairs, which meant liquidity providers could create pair contracts for any two ERC-20 tokens.

Uniswap’s native token, UNI, was launched in September 2020 and has since been attracting users and LPs to the platform. UNI is an ERC-20 token, which means it was built on Ethereum and can be stored in any cryptocurrency wallet that supports ERC-20 tokens. Also, due to Uniswap’s open-source and decentralized nature, there is no central entity controlling or profiting from the protocol. Instead, it’s maintained and improved by a community of developers and its governance, both of whom contribute to its progress. 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.

The UNI Token

For example, if an LP sets a price range of $1,000 to $2,000, the liquidity provided can only enable trading between these two prices, instead of within infinite price ranges. LPs in these pools provide liquidity for a price curve between 0 and infinity, which means the capital provided by LPs in an AMM is evenly distributed across all price ranges. This means only a portion of the liquidity in the pool sits where most of the trading is taking place. However, it doesn’t make much sense to provide liquidity in a price range that is far from the current price or will never be reached. Users could also trade between the tokens without the need for intermediate conversion to ETH.

How to Use Uniswap for NFT Trading: Step-by-Step Guide

Larger orders are therefore much more expensive than smaller orders and will lead to progressively greater slippage. It also means that the larger the liquidity pool, the smaller the shift between x and y, and therefore, the easier it is to fill large orders. DEXs offer unique benefits that can make them a compelling alternative to CEX. Created by Hayden Adams in 2018, its implementation was inspired by the underlying technology first described by Ethereum co-founder Vitalik Buterin. Uniswap pioneered the Automated Market Maker (AMM) model and played a crucial role in the invention and development of DEXs. Today, Uniswap continues to be one of the how long does it take to mine bitcoin cryptocurrency most user-friendly DEXs available, with substantial liquidity and an extensive selection of token listings.

Step 6: Wait for the transaction to be processed

Enter the amount you want to send, choose the cryptocurrency from the drop-down menu, and in the “To” field, add the wallet address or ENS name of the recipient. Below, we’ll walk you through the steps to successfully swap tokens on Uniswap. Once you’re set, we’ll guide you through how to swap, send, and buy tokens, as well as how to trade NFTs, making it easy for you to navigate all the features Uniswap has to offer. UNI is the native token of the Uniswap protocol, which gives holders voting rights to the platform’s governance. Most people will just want to add liquidity to an existing pool, so we’ve outlined the steps for you to add liquidity to Uniswap below.

1. Let’s assume Alice is an LP who has deposited 1 ETH and 100 USDT into a Uniswap pool with a total liquidity of 10,000 (10 ETH x 1,000 USDT); the rest was funded by other LPs like her.
2. Once you’re there, you’ll see a “Launch App” button in the top right corner.
3. Uniswap is a decentralized, peer to peer exchange developed specifically for the Ethereum network, also described as a decentralized protocol for automated liquidity provision on Ethereum.
4. In your wallet, you’ll need to approve the token you’re swapping, which will require a network fee.
5. The most common of these, and the one best supported by Uniswap, is Metamask.

Approve the transaction in your wallet, confirm the swap, and pay any necessary network fees. cryptocurrency exchange comparison Generally, Uniswap is used to provide liquidity, swap, send, and buy ERC-20 tokens in a decentralized manner. Users can also trade NFTs and participate in governance through the platform’s native UNI token.

Furthermore, there is no listing process for ERC-20 tokens on Uniswap due to its decentralized nature, and this enables the launch of any token if there is a liquidity pool for the traders. Launched in 2018, Uniswap v1 was the first version of the Uniswap protocol. It was designed with simplicity in mind but still allowed users to trade any ERC-20 token on the Ethereum blockchain. The protocol gained popularity among the Ethereum community and worked as a proof of concept for AMM based decentralized exchanges.