What is Uniswap? Uniswap is a fully decentralized protocol for automated liquidity provision on Ethereum. A simple formalized equation drives unstoppable liquidity for thousands of users and hundreds of applications. Uniswap empowers developers, liquidity providers and traders to participate in a financial marketplace that is open and accessible to all.
The Uniswap protocol is trustless and decentralized because it lives entirely on-chain. Anyone running an Ethereum node can interact with the contracts directly which will perform as programmed for as long as Ethereum exists. However, not everyone wants to run a node. Instead, many users choose to interact with Uniswap through web interfaces, trade aggregators, wallets, or other DAPPs that have integrated Uniswap natively in their smart contracts.
Mission
– Uniswap is transparent, censorship-resistant financial infrastructure for Ethereum.
– Uniswap lowers barriers of entry to financial participation and removes central points of failure.
– It enables anyone to create new markets, provide liquidity, and build financial applications that could not have existed before.
How does Uniswap work?
Uniswap is an automated liquidity protocol. In practical terms this means there are template smart contracts that define a standard way to make liquidity pools and corresponding markets that are compatible with eachother. There is no orderbook, no centralized party and no central facilitator of trade. Each pool is defined by a smart contract that includes a few functions to enable swapping tokens, adding liquidity and more.
Conclusion
Uniswap is a protocol for exchanging ERC-20 tokens on Ethereum. It eliminates trusted intermediaries and unnecessary forms of rent extraction, allowing for fast, efficient trading. Where it makes tradeoffs decentralization, censorship resistance, and security are prioritized. Uniswap is open-source software licensed under GPL.