How To Use Uniswap: Step –By-Step Guide

Do you want to know how to use Uniswap automated liquidity protocol? If your answer is in the affirmative, then this article is for you. Since its launch, Uniswap has provided the needed boost to Decentralized exchanges (DEX). It has helped to solve the problems of high decentralized liquidity.

Before we go into the step-by-step guide on using Uniswap, let’s talk about Uniwap itself.

What is Unswap?

Uniswap is a decentralized and automated liquidity protocol. It is a fact to say, Uniswap is the top DeFi liquidity provider. It runs on the Ethereum protocol, where you can create new markets and get rewarded for it. You can become a liquidity provider for a pool on Uniswap. To become a liquidity provider, you will deposit an equal value of each underlying token in return for other tokens available in the pool. For a good knowledge of using the Uniswap liquidity pool, there are some key features you need to know. Some of these features include:

• Swap

The Swap feature on Uniswap allows you to exchange or swap between Ethereum (ETH) and other ERC-20 tokens.

• Pool

Uniswap’s Pool feature allows you to earn by providing liquidity. You can do this by depositing tokens into a smart contract, and you will receive pool tokens in return.

• Smart Contracts

Individual smart contracts run the trading pairs, and each of them manages a liquidity pool.

• Liquidity Pool

They are pools of tokens locked away in a smart contract and are used to ease trading on the platform.

• Liquidity Tokens

They are unique tokens that Uniswap mints to a liquidity provider’s address. The number of liquidity tokens sent to a liquidity provider’s address is proportional to his/her contribution to the pool.

• Fees

Traders will pay 0.30% on all trades. This amount gets shared between liquidity providers and the protocol. The liquidity traders take 83.3% of the amount traded while the protocol collects 16.7%.

How To Use Uniswap Liquidity Pool

You can connect directly to the Exchange. The following wallets are supported on Uniswap:

• MeataMask (Web 3 wallet)
• WalletConnect
• Coinbase Wallet
• Formatic Wallet, and
• Portis Wallet

1. You can install MetaMask or any of the remove wallets of your choice. It can be installed as a Google Chrome extension.
2. Go to the Uniswap website and click on the “Launch App.”
3. You will be immediately redirected to the Swap/Pool page.
4. Please select the version of Uniswap you want to use, but you should use the Version 2.
5. Connect your wallet to Uniswap using “CONNECT TO A WALLET.” You will see all the wallets supported by Uniswap.
   6. In the case of a swap, if you are trading, you should select the input token, after which you also choose the output token.

7. You should add liquidity and then select the tokens you want to put in the pool or remove from the pool.
8. If you are not seeing the pool you joined, then you can import it by pasting the token contract address. Then click on the back button to join or remove in the pool.

How to Swap Token in UNISWAP

For further clarification, Uniswap allows you to exchanges between ERC-20 tokens.

Go to the Swap tab and select the amount of ERC-20 tokens you want to swap. You can choose the token you want to swap to by clicking on the down arrow located under “TO.” A list of tokens will appear, and you will select the one you want to swap to. But, if you cannot find your preferred token on the list, you can paste the contract address of the token.

Uniswap will show you an estimate of the number of tokens you will receive after the swap. You can click the “Swap” button to confirm. Immediately your transaction is complete; you will be informed by Uniswap. They will provide you with a link to Etherscan, where you can see your transaction details.

The Things To Look Out For When Swapping Your Tokens On Uniswap

There are several figures that you need to look out for during the swap, they are:

• Tokens:The number of tokens you are swapping from and the corresponding amount that you will receive.
• Least Guarented: The least guaranteed amount of tokens is what you will receive if there is price reduction while processing your transaction as per your slippage and time out setting.
• The price impact: The difference between the price that Uniswap provides and the market price due to the trade size.
• Liquidity provider fee: The number of fees that you will be paying to the protocol in the course of your transaction.

How To Speed Up Your Uniswap Transaction

While you learn about the Uniswap liquidity pool, you should also learn how to speed up your transaction process. But, it comes with a price. When you speed up your Uniswap transaction process, you can outbid other competitors from trying to process the same transaction.

You can achieve this by paying more gas fees than others. If you want to see how much gas fees to pay, check out the Ethereum Gas Station for the stipulated prices. We suggest that you spend between 5-10% more than the specified price for fast transactions. You can input the number of gas fees you wish to pay in your wallet “pop-up” window before confirming your transaction.

How You Can Tackle Slippage Tolerance On Uniswap

Slippage is how much volatility you want. And That slippage tolerance is there to help to save your money by canceling the transaction in case of high volatility or Low Liquidity.  Slippage occurred when the price at which your order was executed did not match the price when you confirmed the transaction. On Uniswap, we call it “slippage tolerance.” Tokens whose price is on an upward trend may experience a lot of competition to get such tokens. In this case, you can increase the chances of processing your transaction faster by increasing your slippage tolerance.

You can adjust your slippage tolerance by clicking on the gear icon located at the top right corner of your browser. This action will help decrease the smallest amount that is guaranteed o be sent to you. If a new or high demand token It’s better to set 2-5% slippage tolerance So, it will increase the chances of your transaction going through. But, there is a high chance that you will receive fewer cryptocurrencies.

What Is The Difference Between Uniswap Version 1 & 2?

Uniswap recently launched an improved version of their Exchange, called version 2. The significant difference between versions 1 & 2 is the available features. Version 2 provides users with ERC-20 to ERC-20 token pools, flash swaps, and native price oracles.

Conclusion

We believe that you can comfortably conduct your transactions on the Uniswap decentralized liquidity pool. If you run into any problem with using the Uniswap liquidity pool, kindly contact us through the comment box provided below.