Homework Task 4

Explain in full a project built on the Ethereum Blockchain

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_{Source: Gaming4cash}

What is Uniswap?

When cryptocurrency started, it had the noble goal of being decentralized. Yes, it's true that cryptocurrencies themselves are ran by decentralization. There's one thing that's usually centralized: Exchanges.

Uniswap is one of the new protocols that runs on the Ethereum blockchain that we collectively know as "DeFi" or Decentralized Finance. Uniswap, to be exact, is a decentralized exchange for ERC20 tokens.

The Uniswap protocol was created by Hayden Adams in the aim for it to be a public good, a community tool that people can use without the need for a middleman and to have no fees as well.

What's Different?

The use of "Constant Product Market Maker Model" makes Uniswap different from your usual exchanges. It's what they call their pricing mechanism.

The equation they use is x * y = k.

Any kind of ERC20 token may be added on the Uniswap protocol by simply having it funded with the equivalent value of ETH and that certain ERC20 token.

The equation they have balances between the ETH and ERC20 token listed, as well as the supply and demand for it - therefor it determines the token's price. When a user buys a listen token with Ethereum, it decreases the supply of that token while the ETH supply increases making that token price go up.

Using that method, the prices on the platform only changes when someone makes a trade. Uniswap balances out the value of the token and only changes it base on the real factors of supply and demand.

Using Uniswap

Uniswap enables you to buy ethereum and any of the listed ERC20 tokens that the platform supports.

Just head over to thee app's website: https://app.uniswap.org/.

On the top right, there is a ‘Connect to a wallet’ button. You can click that to connect to a supported wallet like Trust wallet, or Metamask.

_{Source: Uniswap}

You'll be presented with the trading interface, where you need to select first the token you want to trade with and the token you want to receive:

_{Source: Uniswap}

For this example, we chose UNI as the token we want to trade and we wanted to get ETH out of it.

_{Source: Uniswap}

You will get a swap button if you already connected your wallet and have the funds, it will say insufficient funds if you don't have enough balance, or it will as you to connect a wallet if you haven't yet.

After clicking swap, it will open the transaction on your wallet for you to approve. When you are done, just confirm the transaction and it will be processed. Your chosen tokens will appear in your ERC20 wallet when done.

Some Uniswap Milestones

Uniswap V2 was able to propel the platform to meteoric growth, in just a year.

In February of 2021, Uniswap became the first decentralized exchange or DEX to process more than $100 billion trading volume. Recently, they've been exceeding 1 billion volume per day. Due to this, it became on of the top five most popular exchange.

The UNI token that they launched has climbed to be the 13th largest crypto by market cap when it reached around $23 per token. This was driven by growth of yield farming pools that required holding that token.

There was also a Unisocks craze which is a token back socks. The first pair sold at $12 but due to bonding curve, one pair was sold for $92,000.

Uniswap V3 is being planned, more info here: Uniswap: Year-in Review.

Thanks a lot for reading!

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_{Images with no source were made by me. Thanks @gbenga, @steemitblog, @steemcurator01, @steemcurator02.}