Top Key Features of Uniswap
What is Uniswap
Exchanges are either centralized or decentralized. The decentralized exchanges have, however, proven to be better than the centralized ones in that they can solve problems centralized exchanges can't. With decentralized exchanges, the risk of hacking and mismanagement is checked.
This is not to mean decentralized exchanges do not come without its challenges. Lack of money around an exchange is one of the major challenges of this exchange type. This affects the speed and efficiency of trading, making it a great option for users.
Leading the line of decentralized exchanges is Uniswap. Uniswap is popular for its ability to solve the problem of liquidity faced by similar platforms. To do this, it allows the swapping of tokens without having buyers and sellers create liquidity. Having grown to become one of the most accepted decentralized exchanges, let us examine what Uniswap is and how it works.
Key Features of Uniswap
There are several features of the Uniswap protocol that has made it a great exchange platform over the years. However, of all these features, some have been key in developing a thriving decentralized ecosystem and they include:
The swap feature of the Uniswap protocol is key to the development of the decentralized ecosystem as it lifts away every trading pair's restrictions. Users can swap any ERC20 token with another provided a smart contract and pool liquidity can be created. With this, you can create a trading pair of your own and swap as many tokens as you want to swap.
One of the major challenges that are being faced by decentralized exchanges is that of increasing price feeds. Many decentralized exchanges experience this because they rely on centralized platforms to determine the price. With the pricing mechanism of Uniswap, it has developed a manipulation resistance as there is a fixed equation to determine the price of tokens per time.
Uniswap is an open protocol that allows for several smart contract activities on it. There are several apps on the Uniswap protocol that makes it easy for users to build a front-end user interface on the platform. Some of the interfaces available on the Uniswap protocol include InstaDApp and DeFiZap, both of which allow users to add funds to Uniswap pools. With the open nature of the protocol, it is expected that there will be more integrations in the future. More integrations will mean increased acceptability making Uniswap one with a very bright future.
What Makes Uniswap Outstanding?
The pricing mechanism of the Uniswap exchange protocol is what stands it out from other similar protocols. This pricing mechanism is referred to as the "Constant Product Market Maker Model." This pricing mechanism allows for any token to be added to the Uniswap platform. All that is needed is to fund the platform with the equivalent value of Ethereum and the ERC20 token to be traded. This, perhaps, is the most important reason why there are several tokens listed on the Uniswap protocol.
How does this pricing mechanism work? Take for example you want to exchange LiteCoin for Altcoin. Here, you will be required to launch a smart contract on Uniswap for Altcoin and then create a liquidity pool with the equivalent worth of Altcoin and Ethereum.
Uniswap, unlike other exchange platforms, does not determine the price of Altcoin by the activities of buyers and sellers. It uses a constant equation that has been designed for the "Constant Product Market Maker Model." This equation is represented as x * y = k with x representing the quantity of Ethereum and y representing the quantity of ERC20 tokens. The balance between x and y is what produces k which is the price of the particular token as decided by the protocol.
With this pricing mechanism, the prices of tokens on the Uniswap protocol changes as trades happen. Token swap, and not its price, is what is determined by the activities of buyers and sellers. So while the price mechanism by a constant equation determines the price of tokens, how much people want to buy and sell, is what determines the swap.
Another outstanding feature of the Uniswap protocol is that any ERC20 token can be listed on it without requesting permission. There is, however, a security protocol put in place to validate information provided while listing such token.
Every token has a specific smart contract and liquidity pool. If there is an ERC20 token you want to list and can't find the smart contract, you can easily create one for it. Every token listed on Uniswap needs to have its smart contract and liquidity pool for anyone to trade the token or contribute to its liquidity pool.
The Uniswap Tokens
When a user contributes a new Ethereum or ERC20 token, such a user receives a pool token. To create a pool token, funds need to be deposited to the pool. These pool tokens created can be exchanged or used to carry out transactions on other platforms where the token is accepted as a means of payment. When users who have contributed to the pool make a request to reclaim funds, such a user is credited, and the pool tokens already created are burned or destroyed.
EazySwap, a sub-platform of BitForex Crypto-currency Exchange will launch on September 5, 2020. EazySwap has one of the most professional and advances semi-decentralized matching Protocols, all the trading records and data will be able to trace by the ERC-20 Blockchain system, EazySwap also provides the most user-friendly structure which designed to solve the "High Gas Fee" problem, while still remain its decentralized advantage. 0 gas fee is charged for any transaction in the system. also, EazySwap will be rewarded up to 80% of the trading fees to each liquidity pool provider.
EazySwap currently supports ERC20 based token and many more mainnet token will be supported soon.
With a low barrier of listing requirements for the project, a unique rewarding system for the user and liquidity provider and one of the most professional and advance semi-decentralized matching Protocol with 100% trading data on-chain structure, EazySwap hope to booth up the Defi market and your participation will make us together achieve this historical and revolutionary moment.
BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.
BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts, derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.