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CUniswap is a completely different form of exchange that is fully decentralized – that is, it isn't owned and run by a single organization – and uses an automatic liquidity protocol, which is a very new type of trading mechanism.

What is UniSwap?

The Uniswap platform was created in 2018 on the Ethereum blockchain, the world's second-largest cryptocurrency project by market capitalization, making it interoperable with all ERC-20 tokens and infrastructure, such as MetaMask and MyEtherWallet wallet services.

How does it work?

Uniswap is a market maker that is automated. It is a set of smart contracts that specify a common approach to construct liquidity pools, supply liquidity, and swap assets in practice.

There are two assets in each liquidity pool. The pools keep track of aggregate liquidity reserves as well as liquidity providers' pre-defined pricing methods. Every time someone trades, the reserves and prices are automatically adjusted. There is no central order book, no third-party custody, and no matching engine for private orders.

Use in practice

Uniswap is also open source, which means that anyone may copy the code and use it to build their own decentralized exchange. Users can even list tokens on the exchange for free. This is a significant difference because most centralized exchanges are profit-driven and demand exorbitant fees to list new coins.

Users maintain control of their funds at all times because Uniswap is a decentralized exchange (DEX), as opposed to a centralized exchange, which requires traders to give up control of their private keys so that orders can be logged on an internal database rather than executed on a blockchain, which is more time consuming and expensive.

How can I earn?

A Uniswap pool may always be utilized to purchase or sell a token since reserves are automatically rebalanced after each deal – unlike traditional exchanges, traders do not need to match with particular counterparties to execute a trade.

It eliminates the risk of losing assets if the exchange is ever hacked by keeping ownership of private keys. According to the most recent statistics, Uniswap is the fourth-largest decentralized finance (DeFi) network, with over $3 billion in crypto assets stored on its platform.


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