What is Uniswap

What is Uniswap

SUMMARY KEYWORDS

tokens, crypto, centralized exchanges, exchange, order, swap, liquidity, platform, wallet, decentralized exchange, blockchain, episode, uni, trading, coinbase, sell, dex, designed, created, operated

00:01

Welcome to the New to Crypto Podcast designed to guide you through the crypto landscape with pinpoint accuracy created for the new and intermediate crypto investor. Join your host Crypto Travels Michael as he takes you through the different facets of getting started and succeeding in your crypto journey. New to crypto podcast brings you new episodes daily Monday through Friday with surprise bonus episodes sometimes on the weekend. Let me ask you, are you new to crypto and don’t know where to start? Are you more experienced but have questions? Then you’re in the right place. This podcast is designed for you coming at you from the Trading Center and the lifestyle design studio. Here’s your host Crypto Travels Michael.

00:53

Okay, today is the beginning of the DEX or swaps series. And today we’re gonna jump into and dive into what is Uniswap is the leading decentralized crypto exchange that runs on the Ethereum blockchain. Most of crypto trading takes place on centralized exchanges, like Kraken, Crypto.com, Kucoin, Coinbase, Binance, Bitmart, and some of the others. 

01:26

These exchanges are controlled and operated by a single authority. It’s usually the company that operates the exchange, they require users to place funds under their control, and use a traditional order book system. To facilitate the trading. Order book based trading is where buy and sell orders are presented in a list, along with the total amount placed in each order, the amount of open buy and sell orders for a token is called market depth. In order to make a successful trade using this system, a buy order has to be matched with a sell order and the opposite side of the order book for the same amount and price of an asset and vice versa. 

02:16

For example, if you wanted to sell one Ethereum on a centralized exchange, you need to wait for a buyer to appear on the other side of the order book who’s looking to buy an equal or higher amount of Ethereum at that price. The main problem with this type of system is liquidity, which I’m referring to the depth the number of orders there are on the order book at any given time. If there’s low liquidity, it means traders may not be able to fill their buy or sell orders. So let’s jump into what Uniswap is. Uniswap is a completely different type of exchange that’s fully decentralized. This means it isn’t owned or operated by a single entity. 

03:07

Uniswap uses a new type of trading model called an automated liquidity protocol. This uniswap platform was started in 2018. And it was built on top of the Ethereum blockchain, which makes it compatible with all ERC 20 tokens and infrastructure, meaning all tokens built on the Ethereum blockchain, which are ERC 20 tokens, you can use wallets like meta mask and my ether wallet, as well as others to configure to uniswap. In order to swap tokens using uniswap. 

03:43

Uniswap is pretty large, just in a short amount of time. Since its creation, the total trade volume has exceeded over $385 billion. Over 59 million trades have taken place on uniswap. And over 1.5 million users have used uniswap at one time or another in the past. So let’s go over a little about how Uniswap is completely open source, which means anyone can copy the code if you wanted to. You can copy their code and create your own decentralized exchange. uniswap allows users to list tokens on the exchange for free. 

04:32

You should know that centralized exchanges are more profit driven, and they have much higher fees to list new coins or tokens on their centralized exchanges. So this is one reason why you may not see all of the different tokens that you may be looking for on a particular exchange. This difference alone is a big enough difference between uniswap and other decent Utilize exchanges like it, and centralized exchanges, like Coinbase, or Binance, for example, or some of the others. Because Uniswap is a decentralized exchange, or a dex. It also means users maintain control over their funds or tokens at all times. With centralized exchanges. This isn’t the case. With centralized exchanges, you’re required to give up control of your private keys, so that orders can be logged onto an internal database rather than be executed on a blockchain. This is also more time consuming and expensive by retaining control of your private keys. It eliminates the risk of losing assets if the exchange has ever been hacked or something else happens. 

05:46

So let’s go over how Uniswap works. Uniswap runs on two smart contracts, an exchange contract, and a factory contract. These are automatic computer programs that are designed to perform specific functions when certain conditions are met. The factory smart contract is used to add new tokens to the platform and the exchange contract facilitates all token swaps, or trades, any ERC 20 based token can be swapped with another on the updated uniswap version 2.0 platform. So when using their version 2.0 platform recently uniswap performed an upgrade to their system. It is generally preferred now to use version two on their platform when possible. 

06:39

You should also know that uniswap has their own token, it’s called the Uni token. And this is a native token to uniswap. It’s also for governance. This gives holders the right to vote on new developments and changes to the platform, including how minted tokens should be distributed to the community, and developers. Also any changes to fee structures in the future. The uni token was originally created in September of 2020. The current circulating supply is just over 587 million uni. I should note that uniswap is governed by its community. They have a Governance Forum and voting uniswap is a growing network of defy applications. 

07:26

Over 200 defi integrations to date. uniswap was founded by Hayden Adams, who was a former engineer at Siemens. Remember, once you configure your wallet to uniswap, you will need some aetherium to pay gas fees on the blockchain in order to complete your transaction via their swap. Remember, as mentioned in a previous episode about dexis, or decentralized exchanges, that they are completely private, anonymous and no one is involved in the middle of your transaction. 

08:06

You literally connect your wallet anonymously to uniswap. Choose the tokens, which you want to give when swapping. Choose the tokens that you want to receive when the swap is completed. Pay the gas fee on the network, perform the exchange or swap and receive your new tokens in your wallet. After you’ve received your new tokens in your wallet. And you’re done. You can disconnect your wallet from uniswap and you’re completed. That’s it. So today we have learned what uniswap is, what blockchain it uses to swap tokens and that it is a dex, a decentralized exchange. And the uniswap has its own native token called uni.

08:57

So remember to subscribe to the podcast if you liked today’s show. and tune in tomorrow for another episode, where I go over another swap or dex. Until then, have a great day.

09:11

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