Uniswap is the protocol on Ethereum for swapping ERC20 tokens. Unlike most exchanges, which are designed to take fees.
Also, uni swap designs the function as the public good—and tool for the community to trade tokens without platform fees and intermediaries.
And it’s unlike most exchanges, which match buyers and sellers to determine prices and execute trades. And uni swap uses the simple math equation and pools of tokens and ETH to do the same job.
Table of Contents
Who Invented Uniswap?
- Uniswap creates Hayden Adams, who inspired the develop the protocol by the post made by Ethereum founder Vitalik Buterin.
What’s so Special about Uniswap?
- Uniswap’s primary distinction from other decentralized exchanges is using the pricing mechanism called the “Constant Product Market Maker Model.”
- Any token can add the Uniswap by funding the equivalent value of ETH and the ERC20 pass traded.
- For example, if we wanted to make the exchange for the altcoin called Durian Token. We can launch the new Uniswap smart contract for Durian Token and create the liquidity pool.
What else is different about Uniswap?
- It’s an ERC20 token that can list on Uniswap–no permission required. Each ticket is a smart contract and liquidity pool–if one doesn’t exist, it can be created easily.
- Once the token exchanges smart contract and liquidity pool, anyone can trade the token and contribute to the liquidity pool.
- And though earning the liquidity provider fee of 0.3%. Also, it contributes to the liquidity pool. We need the equal value of ETH and ERC20 tokens.
How are Uniswap tokens Produced?
- Whenever new ETH/ERC20 tokens are contributed to the Uniswap liquidity pool, the contributor receives the “pool token,” which is also the ERC20 token.
- Also, pool tokens creates whenever funds are deposited in the pool and as the ERC20 token. And pool tokens can freely exchange, moved, and used in other apps.
- When funds are reclaimed, the pool tokens burned and destroyed. And each pool token represents a user’s share of the pool’s total assets and percentage of the pool’s 0.3% trading fee.
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