Uniswap: Key to fast and Secure ERC-20 Tokens Exchange
October 12, 2020
Add: Veronica Zubrii
Uniswap is a simple and intuitive DeFi service for exchanges between ETH and ERC-20 tokens. It allows users to utilize the protocol and perform transactions without middlemen or related fees. Buyers and sellers execute trades without getting connected – math equations and pools do this instead.
Cryptocurrency exchange is often complicated by the huge fees charged by exchanges and the time it takes for buyer/seller matching and orders to be executed. Uniswap solves both problems of decentralized exchanges at once by generating the market automatically – there’s no need for buyers and sellers to create liquidity. Here’s a detailed UniSwap Platform guide from the QDAO DeFi team.
Uniswap is an Ethereum-based exchange that allows users to swap ERC-20 tokens in a couple of clicks. It deploys two kinds of smart contracts:
- Exchange contracts
- Factory contracts
Combined together, they allow users to leverage a new exchange contract in place of old ones, facilitating direct swapping.
What makes Uniswap superb is the ‘Constant Product Market Maker Model’. Any token can be added to the platform by funding it with the equivalent value in ETH and ERC-20 tokens. Users can launch a new smart contract for any coin and create a liquidity pool for it. The price of assets changes only when trading takes place on the platform. Essentially, Uniswap balances the value of tokens and swapping depends on how much people want to buy/sell them.
Currently, Uniswap supports about 80 cryptocurrencies and 60 exchange pairs with new assets being added regularly. The list includes a few stablecoins, such as Tether and USDC and users can generate new pairs and markets (for example, they can create pool liquidity after pairing ETH with USDQ). The information about assets (price, liquidity, 24H volume and price change) is available in the dashboard. Also, it provides wallet analytics.
How to exchange tokens in Uniswap
Open the Uniswap main website and click on ‘Launch App’. You will be redirected to the converter interface. Click on ‘Connect to a wallet’:
Choose from the available wallets (MetaMask, WalletConnect, Coinbase Wallet, Fortmatic or Portis). You will be connected automatically.
Now you can select the details of the transaction:
- Choose the cryptocurrency you want to exchange, specify the amount (enter it manually or press MAX to swap all).
- Select the cryptocurrency you want to receive. The amount of coins will be calculated automatically.
- Enter the recipient’s wallet address or ENS name.
Below, you can see the minimum amount received, price impact at the current moment and the liquidity provider fee. Click on ‘Swap’. You can find the coin using the list with search like QDAO, USDQ or use a smart contract address.
Double-check the details of the transaction. If you agree with the conditions, click on ‘Confirm’. You will be redirected to the Fee window. Confirm the details. Click on ‘Edit’ to select the speed of transaction and the related fee.
Note that the transaction might fail due to the slippage! If that happens, go to Pool → Add Liquidity. Select cryptocurrencies for the swap. Confirm Supply. Repeat the transaction, as stated above. The asset will appear in your wallet in a matter of a few minutes.
Some transaction details can be customized – click on the Cog icon in the upper right corner. For instance, you can regulate the slippage tolerance (price of order vs. price at which it was requested), transaction deadline and a few other interface settings. Toggle Expert Mode allows skipping confirmation modals and staying at high slippage traits (at your own risk).
Uniswap is a sensible solution for the cheap and quick exchange of any ERC-20 token. It allows for initialization of custom pools and boasts flexibility, compared to other decentralized exchanges.