In this article: Hide
UniSwap rose to prominence in 2021, as one of the first decentralized exchanges of a totally new type. UniSwap took hints from previous projects like 0x protocol, Balancer, Bankor Protocol and other types of algorithmic exchanges, and proposed its own version to price discovery. UniSwap is one of the most significant DeFi projects to spring from cryptocurrency startups.
UniSwap proposed a series of smart contracts, leading to its current V3 market, which carried more than $1.5B in trades per day as of December 2021.
How to Use UniSwap
UniSwap is an entire ecosystem consisting of well-adapted wallets and analytics tools. The core UniSwap app is relatively simple, requiring the connection of a wallet to the protocol.
UniSwap offers wallet options that include:
UniSwap offers options for a fast exchange on a multitude of coins and tokens, hinging on available liquidity. Other uses include liquidity mining or yield farming, where assets are locked into the exchange to serve other traders in exchange for a token-based reward.
UniSwap offers a similar simplified experience like Pancake Swap, but tailored to the Ethereum network.
What are the UniSwap Fees
One of the big problems for UniSwap is fees. During periods of high network load, fees can easily run into the hundreds of dollars. What is worse, stuck transactions end up paying fees and not achieving their goal.
The newly launched UniSwap V3 on Polygon Network may bring down fees to very reasonable levels, if they are paid in MATIC tokens. Switching to UniSwap on Polygon Network should be available soon, but may require some gas fees to move tokens through an Ethereum-Polygon bridge.
Reports on early UniSwap transactions on Polygon suggest fees may be as low as $0.05.
Play to Earn Games on UniSwap
UniSwap is a tool to realize profits from play to earn games. Many prominent game reward tokens are present on UniSwap, for a fast exchange into other assets.
UniSwap V3 contains pairs for Town Stars, The Sandbox, Vulcan Forged, Illuvium, Decentraland, Wolf Game Wool, as well as vaults and liquidity pairs for smaller tokens. However, less liquid pairs may be highly risky.
ShibaInu (SHIB) is also represented on UniSwap, potentially becoming an exchange hub for the growing game branch of the meme token.
What is the UniSwap Token
UNI, or the native UniSwap token, is an Ethereum-based asset, now potentially also moving on the Polygon network. UNI is also known as a Liquidity Provider token, as it is awarded to those that put funds into liquidity pools or pairs.
Staking on UniSwap varies and the rewards may not guarantee an offset of the initial loss. Because UniSwap attracts both traders and liquidity providers, there are periods where liquidity providers have to see their funds lose value and wait out for recovery before taking out their investment.
Is UniSwap Safe
To use UniSwap safely, make sure you are not connecting your wallet to a cloned page. Never follow links from chats, and bookmark the correct page for swapping assets or providing liquidity.
When earning in-game tokens, make sure you understand the implications of impermanent loss before setting aside assets for liquidity mining.