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Gate.io Blog DEX ‘Uniswap’ for swapping Ethereum and ERC-20 tokens

DEX ‘Uniswap’ for swapping Ethereum and ERC-20 tokens

01 July 15:56

Itro

DeFi is one of the trends in the virtual asset industry. A representative DeFi business model is DEX. DEX stands for Decentralized Exchange. Uniswap is a protocol for swapping between Ethereum and ERC-20 tokens.

Features

LP(Liquidity Pool): LP are one of the core technologies of the DeFi ecosystem. This is the core for AMM. LP is required to swap tokens through AMM. LP are funds deposited by liquidity providers in Smart Contracts. LP allows users to swap any tokens they want at any time. A portion of the swap fee goes to the liquidity provider. Providers provide liquidity to the pool and earn fees.

AMM(Automated Market Maker)
: AMM can provide pool to users without traders. Uniswap maintains a LP with AMM, so there is no Order Book (Buy/Sell) like the Spot Market. Swap tokens without ordering due to automated price adjustment. This protocol is Open Source and anyone can use it to build front-end apps. In these automated protocols, users are using a P2C(Peer-To- Contract) environment rather than P2P(Peer-To-Peer).



Convenience

Unlike CEX, Uniswap does not have to wait for buy/sell orders to be executed. Just one-click swap and you can get the tokens you want. Tokens with low trading volume on the spot market are difficult to trade. But with Uniswap, you can swap right away. At this time, if the liquidity pool is small, the token price may be higher than the spot market. Therefore, you should be careful when using DEX too.

Editor YB's Comments

Recently, decentralized virtual asset exchanges are on the rise. Uniswap is the DEX protocol for the Ethereum network. Anyone with an Ethereum wallet can swap tokens using the method introduced in this article. There may be limitations in this process. However, it is worth paying attention because people are increasingly interested in technology that does not require trust.

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