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How to earn Interest With Uniswap

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Written by   168
2 years ago

Uniswap is a completely decentralized exchange for ETH and other tokens that are issued on the Ethereum blockchain, for example Compound’s COMP token.

Uniswap provides two main use cases:

users can provide liquidity for others who want to exchange tokens or they can exchange tokens against each other.

If you provide liquidity, you earn a commission fee of all trades being made by traders. In the following we will take a closer look at the two use cases:

1. Bob wants to provide liquidity for a so-called liquidity pool. First, he has to decide on a specific Ethereum-based token for which he wants to provide liquidity. Bob opts for the COMP token. If Bob now wants to provide COMP tokens worth 100 USD to the COMP liquidity pool, he must also provide ETH to the same amount, i.e. also ETH worth 100 USD. Bob would then have invested 200 USD.

All users who provide liquidity for his pool would then earn 0.3% of the commission fee on every trade that takes place in the ETH-COMP currency pair. How much Bob earns exactly on all commissions in the ETH-COMP pool depends on his share of the total ETH-COMP liquidity pool. Bob can withdraw his liquidity from the pool at any time.

2. Next, Bob would like to swap ETH for DAI. This is very simple: Bob selects the appropriate currency pair and is directly offered the price. With one click Bob exchanges the tokens, paying a commission fee of 0.3%.

He would pay twice the commission fee (0.6%) if he were to exchange DAI for COMP, because Uniswap performs two swaps in the background: first DAI for ETH, and then ETH for COMP.

Now, imagine that Bob accidentally enters 1,000 ETH instead of 1 ETH, and the price for the swap suddenly becomes much more expensive.

To understand why this is the case, we must to take a closer look into Uniswap’s pricing mechanism.

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Written by   168
2 years ago
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Comments

Nice definition.I also use uniswap.Actually i feel comfortable for swapping many Erc token to ETH.

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2 years ago

Erc tokens are very undesirable with less potential, Its better when you swap to ETH.

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2 years ago

This is very good post.

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2 years ago

This is wonderful

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2 years ago

Thank you dear

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2 years ago

It is a very important articles. Thanks

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2 years ago

You would definitely love my 1st post then

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2 years ago

Wonderful and nice article, keep it up dear

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2 years ago

We encourage the defi community watch out for my next post

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2 years ago

Very good I love this keep it up

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2 years ago

Thank you for your revies expect more

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2 years ago

Very informative for us! Especially for me, becouse I don’t knew about Uniswap. Thank you for sharing it with us

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2 years ago

I am Glad you loved it pls subscribe for more update

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2 years ago

Sure, also subscribe me for support

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2 years ago

That's great the article sound so beautiful and interesting

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2 years ago

God bless you, I took a hard time writing it

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2 years ago

This is great of you to share this beautiful article

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2 years ago

Thank you ,I am glad you found it a good read

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2 years ago

Good one

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2 years ago

Thank you

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2 years ago

How else can one receive BCH?

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2 years ago

Check my previous article or use www.lazyfox.io

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2 years ago

I'm not a fan of trading but I think I will it some time.

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2 years ago

Trading is the future oneday income the earlier you get into the more advantageous

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2 years ago

I'm totally new to this trading stuff but I've heard of uniswap Because recently it gave a pretty descent amount to It's users who swap and trade through uniswap and I've heard that it's pretty easy and have less fee but I'm starting to learn trading now then I'll completely understand these things +_+

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2 years ago

I hope to see a master trader in you someday, accessing defi services is not a tough Job,You just need a crypto supporting browser and wallet.

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2 years ago

Can you suggest me a good one like a app for reading and in wallet I've trust wallet and chrome 🙈

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2 years ago

Trust wallet can do but i recommend Opera browser or stratus browser, They have a better interface.

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2 years ago