A detailed account of Ethereum has already been given in lesson 4 post by our professor
@gbenga. So I'll be sticking to the project that i am writing about and that is UNISWAP.
Source
UNISWAP is a creation of a great & genius mechanical engeenier Hayden Adams. It is a decentralised cryptocurrency exchange based on Ethereum blockchain . UNiswap facilitates automated transaction via smart contracts. Uniswap uses no intermediary and no order book . It is GPL Licenceced open source software.
For better understanding of UNISWAP, some of the terms mentioned like decentralized, automated transaction, smart contract, no order book and intermediary , need a bit description.
Decentralized as we all know is something which is not under control of some central authority. What we usually do on centralised exchanges , we plcae an order and that order gets listed on the platform and we have to wait for buyer/seller on the other side to match our requirements and than order gets executed. Suppose we want to sell 1 ETH for 1500 US$, we will have to place order and it will get listed on order book. When a buyer on other side is willing to pay to the same price order will be executed. How UNISWAP is different will be explained in working of UNISWAP.
By open source protocol, it means that anyone can copy its code to create DEX and one more good thing is that you can list token here without any charge unlike most of the centralised exchanges where significant amount of fee is charged for the same.
How UNISWAP works?
There are some investors who contribute to the liquidity pool of UNISWAP for which they are Incentivized via tokens proportionate to the total share they contribute .Example, you contributed 100$ to liquidity pool of 900$ . So with your contribution the total LP became 1000$ . It means your contribution is 10% and you will 10% token share of that pool. In this way, funds are pooled together from many users and are kept ready to execute orders instantly without listing to order book. Also the flat trading fee charge of 0.30% that is being charged by uniswap for trading is added to liquidity pool. You can redeem the token and use for it for trading fee. So we can say that instant and inexpensive trade is facilitated by uniswap.
To execute trade, a user must deposit a pair of tokens. One of the two token has to be ERC -20 because it is this token that is utilized for paying trading fee. The trading fee on uniswap is known as GAS.
How token price is determined?
Token price on traditional or centralised trading platform is determined by supply / demand ratio. More the demand, more is Price and vice versa. Uniswap uses mathematical algorithm to compute token price. As i mentioned above, a pair of token has to be deposited . It is said that multiplicative price of pair has to remain constant. Suppose we have to deposit two assets A & B, AxB = constant. Where A and B are the amount of the asset and not the price.
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Above graph shows how token price varies to maintain balance
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UNISWAP's Governance Token.
UNISWAP like most of other trading platforms has its native token by thre name of UNI. It is known as governance token as it gives token holdere right to vote on new developments and changes to the platform like fee structure and token distribution.
How to use UNISWAP?
#22 Step 1
Set up any
ERC-20 supported wallet such as MetaMask, WalletConnect, Coinbase wallet, Portis, or Fortmatic. If you want to trade on UNISWAP , have some ERC 20 token in your wallet which you have to use to pay GAS.
Step 2
Go to uniswap officeial site that is uniswap. org and see following interface on mobile.
Step 2
At top right corner of above interface, click on use uniswap and following interface will be seen.
Step 3
Click on connect wallet and select the wallet you have. I have coinbase wallet.
Step 3
When you click on wallet (say coinbase) , it will direct you to that wallet. Login to the wallet and you got to see swap option. Select the token to be swapped ( from) and also select the token to which swap has to made (to) and than enter the amount. It will automatically convert it into corresponding token. Go for swap.
Confirm your transaction and that is it.
Thanks.
100% power up
Twitter shared.
Thanks a lot for participating in this week's assignment. You have done well making this post, but then, there are a few things I noticed i your post. Sentences in your post has several spaces like you got each sentences from a source. There are several typos in your post and you should check it out.
Rating 4
Thank you and surely I'll check it out.
https://twitter.com/Qamran7007/status/1367861634375372801?s=20