Are you looking for a guide on how to use Uniswap? If your answer is yes, then this article is for you. Before we go further, let’s explain this platform. It is a liquidity pool protocol for an automated token exchange on the Ethereum Blockchain network. The popularity of Uniswap was made more pronounced due to the surge in decentralized finance (Defi). You can quickly become a liquidity provider on it.
It is the most prominent decentralized trading platform. It has dominated the market, with about 71.9% of the aggregate dex trade volume globally. According to the report published on the Defipulse website,It is dominated by more than 18% of the DeFi economy. At its height, it has about $1.3 billion total-value locked (TVL).
Now, let’s go further to learn how to use it decentralized exchange.
The Key Features Of Uniswap
Uniswap has two significant features called the Swap and Pool.
- Swap: The Swap feature on it allows you to swap between Ethereum and other ERC-20 tokens.
- Pool: The Uniswap Pool feature allows you to earn money when you provide liquidity in the its pool. You can do this by depositing tokens into the smart contract and you will be credited with tokens in return.
How To Use Uniswap Liquidity Pool Exchange
There are three main features available on their decentralized exchange.
1. Swapping tokens
2. Adding tokens
3. Removing liquidity
We will guide you on how to carry out all three functionalities on the Uniswap exchange platform. Uniswap allows some specified wallets, which include MeataMask (Web 3 wallet), WalletConnect, Coinbase Wallet, Formatic Wallet, and Portis Wallet.
How to Swap Tokens on Uniswap Exchange
You must first connect with your wallet, an example is the MetaMask wallet. Once you connect with your wallet, you are in, there are no log-ins or KYC. This process does not cost you any gas.
Once you have gained access to the Uniswap exchange, you will select the tokens that you would like to trade. If this is your first time using the Uniswap platform, you will have to unlock each of the tokens for trading. Here, you will pay a small amount of gas fee (about $0.06).
You can click “swap” to proceed with your exchange and confirm your wallet pop-up (e.g., MetaMask pop-up).
How to Add Liquidity to the Uniswap Exchange
To add tokens to the Uniswap liquidity pool, you will deposit an equal value of ETH and ERC-20 tokens in the liquidity pool. For example, if you want to add 1 SNX to the SNX/ETH pool, you will have to match your SNX deposit with ETH.
You either deposit 0.5SNX into ETH or deposit 1 SNX’s worth of ETH using the exchange rate at that time of your deposit. Once you have your ETH tokens, navigate the “Pool” tab to unlock your ETH tokens. You will pay some gas fees here as well.
Lastly, you can select ETH as your deposit token. When you click on your balance on your Uniswap browser’s right, the maximum possible amount will be displayed.
How to Remove Liquidity on Uniswap Exchange
You will navigate to the “Pool” tab and select “Remove Liquidity” from the drop-down options. Next, select your liquidity token, which will appear on the right side of your Uniswap browser. When you click “Enter Max,” you will see the amount of ETH+SNX you will receive if you remove all your liquidity from the pool.
How To Identify Fake Tokens On Uniswap and Avoid Them
You must know how to identify fake tokens on the Uniswap exchange. Your knowledge of these fake coins will help you protect your money. Any coin can be added to the Uniswap exchange and if you are not careful, you may lose your money on fake coins.
If you mistakenly purchase any of these fake coins, you will not be refunded because Cryptocurrency transactions are irreversible. Most times, the fake coins’ logo looks precisely like the real ones, so you need to be extremely careful.
You can verify a coin on Etherscan. When you go on Etherscan, you will see the token’s contract number you want to trade with match that contract number with the number in your Uniswap browser.
NOTE: DO NOT search for the token or its address directly on Etherscan, rather link Etherscan through Coingecko. Etherscan allows you to search for all tokens and transactions, even the fake ones.
How to Avoid Failed Transactions On Uniswap Liquidity Pool
Sometimes, transactions on the Uniswap exchange can fail. It occurs when the prices of the input currency fall to the level that does not satisfy your present criteria. When transactions fail on Uniswap, the Ethereum you sent will be reverted to you, but the gas fees are non-refundable.
You can avoid failed transactions by looking out for other people trying to carry out the same transaction as you. Go to “Analysis” on your Uniswap browser and search for the intended trading pair. You will see other people who are trying to conduct the same swap as you. If the token price you want to swap is increasing in value, you should increase the number of your gas fees. Doing so will speed up your transaction and beat your competitors to the punch.
You have learned how to use the Uniswap exchange, but be careful how you trade on tokens to avoid spending your money on fake ones. Many people are making gains and cashing out on Uniswap and you can join and become one of those making money on this platform.
Okereke has a passion for researching blockchain and cryptocurrency. He enjoys creating long form educational content to inform others on the opportunities in this space.