Try Quests to earn cryptoReview of Uniswap Pools (USDC / ETH 0.05%)
Uniswap is currently the most famous DEX in the crypto world, fighting with full authority against CEXs! The Uniswap protocol has been designed and implemented in such a powerful way that it is able to perform Swap, use Pools, etc. They support many tokens on different networks and operate as a well-known DEX. In this dashboard, we will review the Pools of its 3rd version.
What is Uniswap Protocol?
The Uniswap Protocol is an open-source protocol for providing liquidity and trading ERC20 tokens on Ethereum. It eliminates trusted intermediaries and unnecessary forms of rent extraction, allowing for safe, accessible, and efficient exchange activity. The protocol is non-upgradable and designed to be censorship resistant.
The Uniswap Protocol and the Uniswap Interface were developed by Uniswap Labs.
How does Uniswap Protocol work?
Uniswap is an automated market maker. In practical terms, it is a collection of smart contracts that define a standard way to create liquidity pools, provide liquidity, and swap assets.
Each liquidity pool contains two assets. The pools keep track of aggregate liquidity reserves and the pre-defined pricing strategies set by liquidity providers. Reserves and prices are updated automatically every time someone trades. There is no central order book, no third-party custody, and no private order matching engine.
Because reserves are automatically rebalanced after each trade, a Uniswap pool can always be used to buy or sell a token — unlike traditional exchanges, traders do not need to match with individual counterparties to complete a trade.
What is a liquidity pool?
A liquidity pool is group of tokens that are locked in a smart contract and used for trading between assets on a decentralized exchange (DEX) like Uniswap.
In traditional finance, liquidity is organized using a central limit order book where buyers and sellers create orders (trade) organized by price and demand.
The Uniswap Protocol takes a different approach, using an Automatic Market Maker (AMM) to replace the traditional order book method with a liquidity pool of two assets, where the price is determined by an AMM.
These pooled tokens are provided by liquidity providers (LPs) who receive an LP token in exchange for providing liquidity.
The Uniswap Protocol AMM sets prices for liquidity pools using the mathematical formula x*y=k.
Prices are determined by the amount of each token in a pool, with x and y representing the two tokens in a liquidity pool.
It is important to evaluate the liquidity available in a pool before swapping. A pool with low liquidity will not give you an optimal price, and could potentially result in a loss.
To evaluate the liquidity available in a liquidity pool, visit https://info.uniswap.org/#/pools and search for the pool or token you would like to swap.
Who uses the Uniswap protocol?
The Uniswap ecosystem includes three types of users: Liquidity Providers, Traders, and Developers.
Liquidity Providers (LPs): People who provide their crypto assets to help with trading.
Traders: People who swap one token for another.
Developers: People who work with Uniswap smart contracts to power new and exciting experiences.
In total, interactions between these classes create a positive feedback loop. They are the fuel that our digital economies need to define a common language. This common language allows users to pool and trade tokens.
Uniswap Websites:
Website: https://uniswap.org
Twitter: https://twitter.com/Uniswap
Github: https://github.com/Uniswap
Help Center: https://support.uniswap.org/hc/en-us
Blog: https://blog.uniswap.org