What is Uniswap V3: how to use and earn

Uniswap V3 is a cryptocurrency exchange that provides an opportunity for participants of the crypto market to conduct a decentralized exchange of tokens. Transactions are carried out directly from the wallet, which excludes the loss of funds due to hacking of the counterparty. It has its own UNI token and a liquidity program.

Features and Benefits of Uniswap V3

The platform entered the market in 2018. It runs on the Ethereum blockchain. Holders of ERC20 standard coins can exchange them quickly and safely using an automated application system based on smart contracts. Smart contracts are digital analogues of contracts in which the terms of transactions are clearly spelled out. For the first time, they are implemented by the creator of Ethereum Vitalik Butorin in the Ethereum cryptocurrency. Now Ethereum can be considered not only as a kind of crypt, but also as an ecosystem with great opportunities.

There are no restrictions on the types of tokens on Uniswap V3. Each user can form a liquidity pool for any type of crypt without commissions. At the same time, the user must pay commissions on the Ethereum network, which can be very large and depend on the network load.

To use the crypto exchange, you need:

  1. Go to the official website of Uniswap and click the Launch App button.

официальный сайт Uniswap

  1. The Uniswap interface starts

Запуститься интерфейс Uniswap

  1. Here you need to link your wallet.

Здесь необходимо привязать свой кошелек.

  1. After confirming the crypto wallet, you can specify the type and number of tokens to exchange.
  2. To complete the exchange operation, you need to confirm the transactions in your wallet.

How to make money on Uniswap V3

There are two types of earnings on Uniswap V3: trading and providing liquidity for pools. Trading can be described as buying a coin when its price is low, followed by resale when the price rises.

Through the liquidity pool on Uniswap V3, the user “freezes” tokens and receives a reward for this. During transactions, the required number of coins is taken from the liquidity pool. Thus, the exchange of coins on the exchange is carried out without intermediaries, and time is significantly saved compared to the transaction scheme on centralized exchanges.

By becoming a liquidity provider, a network participant receives part of the remuneration paid by traders for conducting operations on the platform. Remuneration is divided between suppliers financing smart contracts with liquidity reserves in proportion to their investments.

Reviews about Uniswap

Reviews about the crypto exchange are mostly positive. It is convenient for users that they do not need to go through registration or authorization. Making an order for the crypt exchange is also fast.

Among the disadvantages, the limitations of cryptocurrency pairs are noted, since only ERC 20 tokens are supported, and shortcomings in the design of the site, the interface of which is not always intuitive.

On decentralized crypto exchanges, users independently control their crypto assets, without the intervention of the exchange administration and other third parties. At the same time, security cannot be considered complete. Since any ERC20 tokens are supported, fraud can be encountered on the exchange.

Published: 6 January, 2023

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