Uniswap: Understanding the Decentralised Ethereum Exchange

Exchange tokens and earn with liquidity pools with Uniswap

This article serves as an introduction to Uniswap. My more recently published piece on Uniswap V2 covers the latest enhancements to the protocol. Read that piece here: Uniswap V2: Everything New with the Decentralised Exchange.

Introducing Uniswap

You may have heard of an Ethereum based exchange named Uniswap. Uniswap is a decentralised exchange in the form of two smart contracts hosted on the Ethereum blockchain, as well as a public, open source front-end client. It’s a 100% on-chain market maker allowing the swapping of ERC20 tokens, as well as ETH to an ERC20, and vice-versa.

It also allows you to contribute to liquidity pools for any ERC20 token, and therefore gain commissions in the form of exchange fees for doing so.

Uniswap sounds like a big deal; being able to exchange any ERC20 token, including the native ETH token, without middle men, and allowing anyone with an Ethereum address to contribute to the exchange’s liquidity, and thus earn from it, is no small feat.

This article will break down exactly what the exchange can do and how you can benefit from it, as well as the underlying formulas for…