We see a lot of activities these days in the cryptosphere with a parabolic bull-run pushing up the adoption level. As the cryptocurrency market almost hit US$ 2 trillion in 2021, exchanges mushroomed to facilitate trade, sell and buy cryptocurrency functions.
Uniswap is one such crypto token exchange that typically relies on the Ethereum blockchain and is decentralized.
Uniswap is a DEX: What do you mean by a decentralised exchange?
A decentralised exchange is allows users to trade crypto against another crypto without KYC verification.
Even the U.S investors are allowed to trade on this platform because the United States is the home of this cryptocurrency exchange. There is a significant advantage of using this platform as a cryptocurrency exchange because it supports many cryptocurrencies and is relatively easier to trade on this platform compared to others.
Being a beginner in Cryptocurrency, one must be confused while hitting the platform for the first time. We are here to walk you through Uniswap and how to use the platform to trade your coins.
What is Uniswap a big thing and what it means for the new projects?
Earlier, after the ICO was over, we had to wait for a very long time for it to get listed on centralised exchanges. There were a couple of decentralised exchanges also, like IDEX and FORKDELTA or ETHERDELTA but the trading used to happen similar to centralised exchanges.
There used to be BUY and SELL orders and accordingly the trade used to take place. For some projects, which was very new, it was very hard to get liquidity.
Uniswap, solved the problem.
With Uniswap, the project can add liquidity and list the token at the price they would like to wish. Once the pool is created, traders can trade without worrying much about where to find buyers.
I hope it is now clear how Uniswap works and why it became popular among crypto traders in no time.
In this article, we'll explain every little aspect, including trading, token swapping, and trading fee. So, let's not be afraid, and read further.
How is the listing price decided on Uniswap?
Listing price is decided by the team. Before making trading available on Uniswap, the team needs to add liquidity in the form of two tokens. Later, with the help of lending pairs, anyone can provide more liquidity. Far example, I am the owner of Bharatafinance token, let's call it BFC. If I were to list on Uniswap, I would need to provide liquididty in Uniswap. Let's say I add 300000 tokens in the pool, For price to be 1 USD, I need to add 300000 USD worth of ETH. Let's say the price of ETH is 1500 USD. Then I will need to add 200 ETH to the pool. This will make the listing price 1 USD. Cool?
Uniswap own token, UNI
Uniswap has its own token, UNI. Uniswap listed UNI and gave a huge number of Uniswap users 400 UNI tokens. On this day, those 400 UNI tokens are worth 30*400=12000 USD, alone. It is listed on many exchanges and can be brought easily.
Uniswap Trading: The Interface
Unlike other cryptocurrency exchanges, where you will have buying and selling boxes in green and red color, Uniswap offers you a relatively more straightforward interface. Thus, making you think about how a trade exchange can be streamlined so effortlessly.
You may find Uniswap to be have a unique UI. Basically here, you can trade any new coin that is listed and swap it against any other coin that is supported by the platform. You need not just trade against ETH or BTC, or a limited alt and stable coins.
Before you choose to trade here, let us explain some facts related to Uniswap.
Do You Need to Create an Account on Uniswap?
Like explained above, Uniswap is a decentralized platform. So, you don't need to create an account on it or verify your KYC. However, to operate the Uniswap, one needs to download the Uniswap or visit the official site Uniswap.org.
Once you reach the site, you will see a window like this.
You can launch the app from the right corner, and you will see another window like this.
Once you reach the page, you need to connect to the wallet via Metamask to start trading. Next, you need to connect to the wallet to start swapping the coin.
Please note that Uniswap doesn't accept cash or other fiat currency deposit as you deposit in other crypto exchanges. This means the new traders and investors who are not having the crypto cannot leverage to trade here.
If you wish to trade, you need to purchase the cryptocurrency or the token first with an entry-level exchange, which allows you to deposit the fiat currency. You may also have Ethereum, or USDT and trade against the new coin.
When you click on connect to the wallet, you will find a third level application to start trading. You can follow any of these like we followed the Metamask. This will help you to use the coins available in the Ethereum address and start trading at entry-level.
How to Trade or Swap on Uniswap?
To trade on Uniswap, follow the steps.
After visiting the site, you need to click on select a token on the given screen and then choose the Cryptocurrency. For instance, here, we used USDT and ETH.
One can visit the wallet to check the balance and add a token, as shown in the given picture below.
Next, you need to choose the token that you want to swap. Click on the down arrow under ‘To.’
You will find the cryptocurrency list. You can choose any option that you want to swap to. If your token is not on the list, you can also paste the address of the token.
After that, Uniswap will show the estimated token that you receive after you swap the tokens. To confirm, click on the swap, and you are done.
If you need to monitor the transaction timing, click on the setting given in the right corner.
Is There Any Trading Fees and Withdrawal Fees Applicable on Uniswap?
Compared to any centralised exchange, the fees associated with Unsiwap are pretty high. For each trade that takes place in Uniswap, the exchange charges users 0.30% flat fee. This fee is currently turned of.
Having said that, if it is ever turned on, it would means LPs will start receiving 0.25% of pool trading fees and the rest 0.05% would go for the future development of the exchange.
Is Uniswap Secure?
Uniswap is relatively different from the centralized cryptocurrency exchange platform, which keeps its servers encrypted with two-factor authentications. But Uniswap offers several low-risk downtime servers, and we can say that DEXs are relatively immune to the hackers, attack of viruses and data raids.
Moreover, since it is a non custodial DEX, the server itself never touches your valuable assets which keeps your funds secure. Even if the hacker can hack the exchange, still they cannot access your assets. Your assets are safe with you in your personal wallets.
On the other hand, if you are doing trade on any centralised exchange, then it will hold your assets in their wallet until or unless you withdraw them. But, as we say, not your keys, not your coins. They may lock your tokens anytime, and you would be left with nothing.
This is why UNISWAP is better than any other centralised exchange and is more secure.
How to Check Exchange Rates and Liquidity?
You can monitor the liquidity and the cryptocurrency exchange rate by clicking on the Uniswap icon on the left corner. You will get the complete details of the volume, liquidity and current swap rates and the past data.
Uniswap: Goods and Bads
Let us in short summarise the pros and cons of using Uniswap exchange.
- It doesn't require KYC and any other registration process.
- You have complete control over your tokens.
- You can share transaction fees with the given liquidity providers.
- It doesn't support other than ECR-20 tokens.
- Very high Fees: This is A BIG PROBLEM for small traders. At the time of writing, one single trade costs around 50-100 USD. So there is not much room for small traders.
Video: Uniswap Price Prediction - Can it reach $200?
Uniswap: The Bottom Line
Uniswap is a cryptocurrency decentralised exchange platform and is ideal for cryptotraders who love exploring new coins and does not want to wait for listing in centralized cryptocurrency exchanges.
Uniswap is going to release Uniswap V3 soon which should give the traders a little relief from high gas fees. Plus, they are adding a lot of more functions which I will publish once V3 is out. (Update: Uniswap V3 is released).
You don't need to do KYC and any other registration process. As a token owner, you don't need to pay token fees to list it on Uniswap .
If you wish to trade on the Uniswap, then this should be the the complete guide for you. So, let’s start trading on it. Let us know if you have any questions.