Uniswap is a protocol for automated token swaps on Ethereum. It is designed around features such as ease of use, improved gas usage efficiency, censorship resistance, and zero rent extraction. Support the exchange between ETH (Ether currency) and other different tokens, as well as between tokens.

The biggest feature is that it does not require an order book (pending order book) system, and the design it uses is a Constant Product Market Maker (Constant Product Market Maker), which is a variant of an Automated Market Maker (AMM).

Uniswap is the most popular decentralized exchange on the Ethereum blockchain. In addition to trading cryptocurrencies, users can also stake their holdings in the liquidity pool and participate in liquidity mining. Uniswap uses the UNI token as its governance model, and UNI token holders vote on governance decisions.

Uniswap supports any individual user to issue ERC20 tokens on Uniswap and create a corresponding fund pool. When a certain ERC20 token fund pool (ETH and ERC20 transaction pool or ERC20 and ERC20 transaction pool) is created, the platform encourages all parties to participate Participants conduct transaction exchange in the same fund pool, and give the first liquidity provider who provides liquidity to this contract the right to set the exchange rate between this ERC20 token and ETH (or ERC20 token), and the liquidity provider The provider pays the full transaction fee (0.3% of the transaction volume). When the exchange rate in the fund pool is inconsistent with the broader market, there is room for arbitrage. At this time, arbitrage traders can smooth out these price differences by moving bricks, so that they can maintain the same exchange rate as the broader market. After that, all liquidity providers will use the exchange rate when they recharge as the basis for calculating the equivalent.

Uniswap itself does not hold user funds, instead, funds are fully controlled by smart contracts. These contracts handle every aspect of the transaction, Uniswap’s factory contracts create individual contracts to handle each trading pair, and peripheral contracts support the system in other ways. In practical terms, this means that after each transaction is completed, the funds are immediately deposited into the user's wallet. There is no central authority that can seize user funds, which also means that users do not need to provide identity (KYC) information or create an account.

Starting from V2, the development team of Uniswap can take 0.05% of the transaction fee as income, and other liquidity providers can also charge 0.3% of each transaction as income.

Uniswap V3 adds the aggregated liquidity function on the basis of the AMM curve, and liquidity providers can concentrate funds within the price range set by themselves, and provide more liquidity at the desired price.