Review on Uniswap (V2) by Fanuel PORPORTY
Uniswap, the protocol that automatically exchanges tokens on the Ethereum blockchain
Uniswap is simple, it is a protocol as well as a decentralized cryptocurrency exchange platform open to all Ethereum users and which allows token swaps. The main objective of Uniswap is to guarantee maximum liquidity for these users. The protocol works thanks to liquidity pools, kinds of token reserves stored on a smart contract, which will be used to carry out trades. The exchange rate between the assets is then fixed thanks to the Automated Market Maker
Using Uniswap allows for exchanges without a trusted third party. Uniswap is very transparent due to its simplicity. Exchange pairs can be set up easily using smart-contracts available to everyone. Uniswap is a nonprofit protocol and the fees only go to users providing liquidity to the system. This allows users to pay very low fees, and therefore to carry out transactions at low cost compared to other decentralized exchanges.
Pros
- The liquidity pools do not belong to Uniswap, but are funded by the community, which guarantees interest on deposits
- Tutorials and explanations to make the most of the functionalities offered by the project.
- Version 2 of the protocol introduces flash swaps. Inspired by flash loans that the Aave protocol can offer, flash swaps allow a user to borrow funds from Uniswap pools as long as they are returned in the same transaction.
- Uniswap has a great interface
- Uniswap can easily be connected to other protocols.
Cons
- The long-term risks and benefits of the various DeFi protocols are not fully defined, so you have to be careful.
