Uniswap: The Fast and Easy Token Exchange
March 13, 2019
Have you ever dreamed of an easy and fast way to swap one ERC20 token for another? Do you like the sound of a simple smart contract interface to achieve this, with the lowest gas cost of all the decentralized exchanges? Then Uniswap could just be what you've been looking for.
But that's not all! Uniswap promises liquidity-conscious pricing, fully automated by using a constant product formula. It is possible to add support for any ERC20 token, and it offers frontend implementation which is supported and optimized for mobile usage by traders and liquidity providers alike. This is what we call a truly free and decentralized asset exchange!
- Swap any ERC20 for any other ERC20 in a single transaction
- Trade and transfer to a different address in just one transaction
- Partially verified smart contracts written in Vyper
- Coming soon: Buy ERC20 tokens from any wallet with the use of ENS
How does Uniswap work?
Each ERC20 token has its own ETH-ERC20 exchange contract with reserves of both ETH and the token in question. This list is already quite extensive, but in the case that you would find a token that has not been listed yet, an exchange contract can easily be created with the use of the Uniswap factory contract. It's possible for anyone to become a liquidity provider on an exchange, all that is required is a corresponding deposit of ETH and the ERC20 token in question to contribute to its reserve. Only a small liquidity provider fee of 0.3% is taken from each trade to be added to the reserve.
More information about this can be found here.
How to use Uniswap
Ease of use and Uniswap go hand in hand, and its website uniswap.io will provide straightforward information and direct the user to its exchange interface for their first token swap. To make a swap, you will need a web3 enabled browser. For your desktop, you can either use the MetaMask extension either in Chrome, Firefox or Opera, or you can use the Brave Browser. Mobile browsers compatible to Web3 are Trust Wallet and Coinbase Wallet. To find other compatible browsers read the web3 docs.
In the examples below, I used MetaMask. In the first image, you will see a small amount of ETH, and I chose to swap this to GRID. It is pretty straightforward, you fill in the amount of ETH you want to use and click on one of the tokens from the list. Then click the 'Swap' button.
MetaMask will now open up and ask to either confirm or reject the transaction as shown below.
And within a short time, in my case this was a few seconds, you will have swapped ETH or any ERC20 token for another.
As with any new exchange, it is wise to first try to swap a small amount before trading larger volumes.
When liquidity and ease of use go hand in hand
Uniswap provides an easy-to-use interface in order to swap ETH or ERC20 token to any other token while anyone can become a liquidity provider easily. The whole process of a token swap takes mere minutes, and this is compared to some other exchanges like a fresh breath of air. Seasoned traders and novice users alike, will be able to seamlessly swap ERC20 tokens, eliminating high gas costs and middle-men, while security is ensured. This makes the Uniswap protocol truly a winner in every way!