Uniswap

Uniswap is the largest decentralized exchange (DEX) protocol built on Ethereum, pioneering the automated market maker (AMM) model that revolutionized decentralized trading. Launched in 2018, Uniswap eliminates the need for order books by using liquidity pools where users deposit token pairs and earn fees from trades executed against their liquidity. The protocol enables permissionless token trading directly from cryptocurrency wallets, allowing any user to swap assets without intermediaries while liquidity providers earn passive income by supplying capital to trading pools, fundamentally changing how decentralized trading operates. Example: A user can swap USDC for USDT on Uniswap by executing a trade against the USDC-USDT liquidity pool, with the swap price determined by the ratio of tokens in that pool and adjusted slightly based on the trade size, while the fees are automatically distributed to liquidity providers in that pool. Why it matters for DeFi: Uniswap's AMM model eliminated barriers to decentralized trading by removing order book requirements and centralized intermediaries, enabling true peer-to-contract trading while creating accessible income opportunities for liquidity providers and revolutionizing DeFi infrastructure.

Category: defi, exchanges trading

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