Anyone who approaches the blockchain world has in common the fact that they want to get in touch with the freedom to invest in currencies that are 100% free from bureaucratic and exchange barriers. Uniswap is one of the great business models within this universe, which allows even more freedom amid transactions.
HOW DOES IT WORK:
Uniswap can be defined as an automated token Exchange, based on Ethereum. It is a protocol designed for automated token exchange, with several qualities for DeFi users: simple smart contract interface for the swap of ER20 tokens, with a formalized model for pooling liquidity reserves.
Also, it has an open-source frontend interface for liquidity providers and traders. It is also important to remember the loyalty of the team behind the project with the philosophy of blockchain itself, reinforcing a commitment to free and decentralized asset exchange.
DIG INTO IT:
It is no wonder that the platform has already become a favorite among DeFi users. It has the advantage of supporting many cryptocurrencies, instead of just allowing a few options, usually limited to BTC vs ETH or XRP, mainly.
The trading view is also another highlight by itself. The user determines which trading view suits him better. Trade views usually show the order book or at least a part of it, price charts of chosen cryptocurrencies, and order history. Another common tool is to buy and sell-boxes.
A bit of good advice to users is to try to have a general look at the trading view, so the user himself can ascertain it to fit his taste. Remarkably, this trading view looks more like a swapping interface: the user connects to his wallet, choose the token he wants to swap, the other token he wants to take and, bingo, the swap is concluded.
Straight, simple, and effective, as it must be.
TAXES CHASES EVERYBODY, SO EVERYBODY HATES TAXES:
Usually, the majority of blockchain users and investors hate bureaucracy … and hence, they also hate fees. The Uniswap platform has a remarkably interesting policy when it comes to fees, always looking for the most interesting alternative for both takers and makers.
First, let us talk about trading fees. Most token exchange platforms available in the market today charge taker fees from takers and maker fees from makers. Uniswap uses an interesting strategy, which has been dubbed “flat flees”. Everyone is charged the same rates, with no differences whatever the side you are at the negotiation.
The value of these flat fees today is around 0.30% per trade, higher than the global average (around 0.25%), but this was also done to decrease withdrawal fees, as we will talk about now.
At Uniswap, what usually happens on other platforms does not happen low trading fees for the Exchange itself, while at the end of the chain, when the user wants to withdraw his money, he is charged high withdrawal fees.
After all, this platform cares about the users. Rates are only charged when a withdrawal transaction is fully executed. When compared to the overall rate generally applied, the fees charged here varies between 15-20% of the global industry (considering the average BTC withdrawal fee). This fact makes Uniswap much more competitive at the end of the day.
ALERT FOR NEWCOMERS:
The platform seeks maximum guarantees for itself and its users, so it does not accept any kind of fiat currency deposits. But what does that mean?
It means that investors without any previous crypto holdings cannot trade here. May be sad for some, but it is true. To get their first cryptos, such investors must go through the so-called “entry-level trading”, which accepts fiat currency deposits.
This means that the platform fits better with advanced and more experienced users.
CONCLUSION:
One of the most well-known Ethereum-based token exchange protocols, Uniswap is completely automated. With a special commitment to free and decentralized asset exchange, the platform further reinforces the philosophy of blockchain in its way of conducting business.
The team behind the platform describes the project as the “transparent, censorship-resistant financial infrastructure for Ethereum”.
One of the main goals is to lower entry barriers to financial commitment and remove central points of failure, to create new markets, provide liquidity and to build financial applications that were impossible to even conceive before that point in time.