What is Uniswap?

Uniswap is the largest decentralized exchange (DEX) operating on the Ethereum blockchain. As a decentralized platform, Uniswap enables users from around the globe to trade cryptocurrencies without the need for intermediaries.

Uniswap emerged as one of the pioneer applications in the realm of decentralized finance (DeFi) on Ethereum when it launched in November 2018. Since then, several other decentralized exchanges have come into existence, including Curve, SushiSwap, and Balancer. However, Uniswap remains the most widely used and popular DEX by a significant margin, they have processed over $10 billion in weekly trading volume as of April 2021.

One notable aspect of Uniswap is its governance token, UNI, which empowers users to participate in voting on important protocol changes, making it truly decentralized and permissionless.

Earning on Uniswap through Liqiduity Mining

What sets Uniswap apart is its innovative Automated Market Maker (AMM) model. In this model, users contribute Ethereum tokens to Uniswap's "liquidity pools," and an algorithm determines market prices based on supply and demand rather than traditional order books used by centralized exchanges like Binance.

By participating in liquidity pools, users have the opportunity to earn rewards from fees. Uniswap supports a wide array of tokens, including any token created using Ethereum's ERC-20 protocol.

Advantages of Uniswap

1. Safety: With Uniswap, funds are never transferred to third parties, thereby mitigating counterparty risks associated with custodial services.

2. Global and Permissionless: There are no boundaries or restrictions on who can trade. Anyone with a smartphone and internet connection can participate.

3. User-Friendly and Pseudonymous: Uniswap does not require any account signup or personal details, making it easily accessible to anyone.

How to use Uniswap

If you're interested in using Uniswap, all you need is an Ethereum wallet like Uniswap's own wallet, Coinbase Wallet or Rainbow and some ETH to cover fees and trade with. Accessing the app browser through the Wallet's mobile application or desktop browser extension will allow you to begin swapping tokens or contributing liquidity.

One notable challenge faced by users of Ethereum-based applications, including Uniswap, is the variability in transaction fees, also known as "gas." These fees can sometimes be costly, especially on Ethereum. Though these days, Uniswap is available on cheaper Layer 2 chains including Base and Optimism.

In early May 2021, Uniswap unveiled version three (v3) of its platform with the aim of enhancing transaction speed and reducing costs.

UNI: A governance token

Uniswap has expressed they are commited to completely decentralize the operations of the protocol., Uniswap introduced the UNI token to enable community ownership over the protocol and facilitate key decision-making processes. Released in September 2020, UNI was distributed through a unique process known as an airdrop.

Each Ethereum address that had previously used the Uniswap protocol received 400 UNI tokens. Over 250,000 Ethereum addresses received this airdrop. Airdrops have since become a popular method for DeFi applications to reward loyal users.

Alternatives

Uniswap's success has inspired numerous DEXs that share a similar naming convention, incorporating "Swap" into their titles. These DEXs make use of the fact that Uniswap's code is open source, allowing anyone to review and adapt the code to create a competing platform. Some notable examples include SushiSwap and PancakeSwap.

Uniswap's contribution to the decentralized exchange ecosystem cannot be overlooked. With its user-friendly interface, security features, and commitment to decentralization, Uniswap continues to empower individuals worldwide to engage in seamless and permissionless cryptocurrency trading.

Building on Uniswap

Whenever a swap occurs in a Liquidity pool, the smart contract emits an event. Basement has a fast and easy to use index of all events happening onchain, and automatically decodes Uniswap's Swap event for you.

query GetUSDCWethPoolEvents {
  transactionLogs(filter: {
    addresses: ["0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640"]
  }) {
    transactionLogs {
      topics
      decoded
    }
  }
}