UniSwap is a Decentralised Exchange (or DEX) allowing users to trade any ERC20 Ethereum-based token directly through a web3 wallet such as the likes of Metamask or Coinbase Wallet. Without any deposits or withdrawals required, by using liquidity pools instead of order books.
In this UniSwap review, I explain how to quickly swap between Ethereum (ETH) and/or any ERC20 tokens. Plus how to add liquidity, to become a liquidity provider by simply depositing tokens into a smart contract and receive a percentage of transactions fees in the pool.
UniSwap Review & Tutorial
What is UniSwap?
Uniswap was launched onto the Ethereum main net in November 2018 and is a decentralized exchange (DEX). Made up of 2 main elements “Swap” for exchanging and “Pool” for providing liquidity. Swap provides a one-stop-shop for exchanging any ERC20 token in a few clicks without having to worry about KYC, deposits, or withdrawals.
By leveraging smart contracts, Uniswap is able to offer autonomous on-chain transactions at marginal costs with no listing fees, no native tokens required and they claim to have some of the cheapest gas cost of any DEX.
Pools, enables users to earn the 0.3% trading fees, (paid by those swapping) by providing liquidity to the Uniswap Pools.
After only one year of the release of V2, UniSwap upgraded to UniSwap version V3 in May 2021. The update was hoped that it would reduce Ethereum GAS fees, however this will have to wait until later in the year. The UniSwap team said that “UniSwap v3 would be deployed at later date on Optimistic Rollup, a layer-two protocol intended to drive down transaction costs”.
UniSwap continues to be the dominate DEX with approximately $51 billion in volume during April 2021.
UniSwap Supported Tokens
UniSwap supports any ERC-20 token in the Ethereum ecosystem. Meaning that you can swap popular tokens such as the likes of ETH, BAT, COMP, LINK, WBTC, and stable-coins such as DAI and USDT. Click here to see Uniswap’s supported tokens
Another advantage of Uniswap is their low trading fees which are currently at 0.30% per trade. In fact, Uniswap claim to have some of the cheapest gas cost of any DEX. However, due to the current congestion on the Ethereum network transaction fees can be very high.
However, by using a smart wallet, such as Dharma with zero gas fees you could potentially save yourself some money.
Slippage (when trading) refers to the difference between the expected price of a trade and the price at which the trade is executed. Slippage can occur at any time but due to high volatility in the crypto markets, this can accrue more frequently than traditional markets.
How to Adjust Slippage
To adjust slippage on Uniswap, click the cog icon on the top right-hand side of the screen. In the transaction settings, you can adjust the slippage tolerance. If your slippage tolerance to too tight you may run the risk of the transaction failing and costing you transaction fees. This can be very frustrating and costly. However, if the tolerance is too wide, you may end up receiving less crypto from the trade.
Tip: Check out Uniswap Analytics, where you can do some research on your trading pairs and adjust your slippage tolerance accordingly.
UniSwap Failed Transactions
This was one of the most frustrating things I found when using Uniswap and cost me a lot of ETH in the process. With so many trading pairs to choose from you, I tried to pick up some ¨Up and coming tokens¨ with small market caps. However, due to the small caps, there was little liquidity, and having my slippage tolerance too tight caused the transactions to fail.
When the transactions fails, your funds are safe and will be returned back to you, however the Gas fee will be deducted. These failed transactions can really add up, so increase the Gas fee you´re paying to speed up the transaction and/or adjust the slippage tolerance.
UniSwap Fake Tokens
There seems to be a scam around every corner in the world of crypto and the Uniswap DEX is no different. Uniswap allows any ERC20 token to be added to its DEX, so you may find a token with the correct name, ticker, or logo but its actually a fugazi, fake, or scam token. Unfortunately, if you trade for a fake token you may lose your crypto as there are no refunds or authority you can go to.
UniSwap Token Lists
Uniswap has introduced a feature called Token Lists, a new standard for creating lists of reputable ERC20 tokens. This is a community-led initiative aimed at creating a system that distinguishes between the most trusted DEFI tokens to separate fake and scam tokens.
These token lists come from projects on Ethereum that maintain lists of ERC20 tokens that are hosted publicly on ENS, IPFS, or HTTPs following a standard JSON schema. These projects attach their reputation to the lists by hosting them on a domain that they control. For example, the likes of CoinGecko have a list on CoinGecko.com that they control, and CoinMarketCap has an ENS domain that they control.
As part of the initial list, Uniswap have now introduced lists from the likes of CoinMarketCap, CoinGecho, Dharma, Compound, Aave, and 1Inch exchange. They’ve also launched a homepage and list browser at tokenlist.org, as well as a community forum at commiunity.tokenlists.org.
How to use UniSwap DEX
Getting started on Uniswap is very easy, especially if you already have a web3 wallet setup. Uniswap allows users to retain custody of their funds and there is no need for KYC (Know Your Customer).
Unlike popular centralized exchanges such as Coinbase Pro or Binance Exchange, there is no lengthy sign-up process, disclosing your name, passport, address, etc.
All you need to get started is a web3 wallet such a MetaMask, Coinbase Wallet, Fortmatic, Portis, and WalletConnect. Connecting a wallet to Uniswap is very simple, just click ´Connect to a wallet´ in the top right and you will have the option to pick your wallet.
If you´re new and don´t yet have a web3 wallet setup, you can check out the tutorial I have created on two of the most popular web3 wallets MetaMask and Coinbase Wallet.
UniSwap UNI Tokens
Uniswap has now released their UNI token. A token used for governance actions in the Uniswap protocol. A total of 1 billion UNI have been minted at genesis and will become accessible over the course of 4 years. The initial four-year allocation is as follows:
- 60.00% to Uniswap community members
- 21.51% to team members and future employees with 4-year vesting
- 17.80% to investors with 4-year vesting
- .069% to advisors with 4-year vesting
They’ve also said that because they owe their success to the thousands of community members that joined their journey over the past two years 15% of UNI can immediately be claimed by historical liquidity providers, users, and SOCKS redeemers/holders based on a snapshot ending September 1, 2020, at 12:00 am UTC.
These UNI tokens are already available for trading on Binance and Coinbase Pro have also announced that they’ll be listing the coin soon and you can transfer your coins immediately ahead of trading. Trading will begin on Thursday 17th September 2020, if liquidity conditions are met.
If you’re interested in pooling UNI you’ll be able to do so from 18th September and will run until November 17th and target the following pools on Uniswap v2; ETH/USD, ETH/USDC, ETH/DAI and ETH/WBTC.
Uniswap governance will be live from day one. So that UNI tokens can be delegated and used to vote through the governance portal. Although control over the treasury will be delayed until 17th October 2020.
How to Claim your UniSwap UNI tokens
How to Claim UniSwap UNI Tokens with DigiFox & Argent
If you’re a Digifox or Argent wallet user, you may not be aware that these apps use Uniswap in the background. Therefore, you may be able to claim 400 UNI tokens as a result of the Uniswap airdrop. At a current price of $4.21, receiving 400 tokens would be worth $1,684 it’s definitely worth checking.
Digifox users that used their swap functionality before 1st September 2020 may be eligible to claim over 400 tokens. And Argent wallets that added liquidity to Uniswap through Argent, or exchanged on Uniswap using WalletConnect will be eligible for UNI tokens too. However, just be aware that you won’t be eligible if you only used their integrated exchange (Kyber) according to Uniswap rules.
There will also be a lot of other wallets and apps that use Uniswap in the background too and you may be entitled to further UNI tokens. For example, users of PoolTogether can also claim if they swapped Ethereum to Dai on their platform. Therefore its always worth checking or asking to see if you have any available.
How Earn UniSwap UNI Tokens
During Uniswap’s announcement of their UNI token, they also stated that 4 liquidity mining pools will also open for UNI rewards. These include ETH/USDT, ETH/DAI, ETH/USDC, and ETH/WBTC pools, each earning an allocation of 5 million UNI over the course of the next two months. This breaks down to 83,333.33 UNI per pool per day or 13.5 UNI per pool per block.
To start earning you’ll need to provide liquidity to one of the UNI pools mentioned above. Once provided, you’ll then have the Liquidity Provider (LP) tokens required to deposit into the participating pools. Then finally, when your deposit is complete, you’ll can then start earning your UNI tokens.
Unstake & Remove Liquidity UniSwap
Is UniSwap Safe?
UniSwap is non-custodial and does not use order books, therefore does not store or hold any funds. Meaning UniSwap is very secure, especially compared to centralized exchanges. UniSwap will only be as secure as the Ethereum blockchain or how safely you protect your assets.
One of the biggest risks is being duped for scam projects and tokens, imitating real projects. However, with the user of their token lists, this should help to reduce this risk. Plus users can also search for a token´s contract address and paste this into UniSwap to ensure they are using the correct token.
Answers to the most common Uniswap issues can be found within their FAQ section of the Uniswap site. However, if this doesn’t answer your questions you can also join the community Discord to get support. They also have Twitter, Discourse and Reddit Communities you can access.