What is Uniswap?
Uniswap is a protocol built on Ethereum, allowing users to Swap ERC20 Tokens on the Ethereum network quickly without intermediaries (Permissionless, Trustless, Transparency).
Uniswap V2 is a decentralized exchange (DEX) using Uniswap Protocol that allows users to:
- Swap ERC20 Tokens fast and easy.
- Contribute to liquidity pools for any ERC20 Token and get commission in the form of Fee Swap.
On May 10, 2021, Uniswap V3 officially updated the Mainnet with the following features:
- Centralized liquidity.
- Updated to add more fee frameworks for Liquidity Provider.
- New Oracle update.
This is considered a complete upgrade compared to the previous Uniswap V2 update.
Instructions for trading on Uniswap
Step 1: To trade on Uniswap, it is necessary to go to the official Uniswap website: https://app.uniswap.org/
Step 2: Select connect wallet.
In this step, investors can choose Wallet Connect, and connect to wallets that are not officially supported such as Safepal Wallet, Trust Wallet, Coin98 Wallet, …
Step 3: Select desired token and swap. For tokens that do not appear on the list, investors can copy the contract of that token and paste it into the list.
Uniswap currently exists 2 versions of Uniswap V2 and Uniswap V3 in parallel. When trading any 1 pair, Uniswap will choose the better price in 2 versions.
Note: The default trading version used is Uniswap V3.
When trading ETH/DAI pair. Since the Uniswap V3 version gives better scaling, this new version is used by default.
However, if you try to trade another less noticeable pair, like ETH/BNT, the screen will show “Get a better price on V2“.
That means, V2 version offers better rate. Maybe it’s because the liquidity on Uniswap V2 hasn’t been completely transferred yet.
And to transact on Uniswap V2, just click on the button “Get a better price on V2” and trade as usual.
If you want to switch back to Uniswap V3, keep clicking on it and go back to the new version.
Instructions for transferring liquidity from Uniswap V2 to V3
Step 1: On the main Uniswap screen, select the item Pool choose More Choose Migrate.
Step 2: If liquidity is provided, the screen will show the LP tokens as follows. Continue to select “Manage“Continue the liquidity transfer process.
Step 3: In this step, the developer will set 2 indicators that the project wants when providing liquidity in Uniswap V3, including: Charges and Price range.
Charges: Uniswap V3 for choosing 1 of 3 fees. The project has also clearly noted which cost should be selected accordingly.
- 0.05% fee: Fees are usually applied to pairs that require stability such as USDC/DAI, wBTC/sBTC, etc. Low fees will make the prices in these pools less volatile.
- 0.3% fee: Fees are applied in most regular Pools.
- 1% fee: Fees are applied to rare token pairs, with little supply in the market.
Price range: Centralized liquidity is a breakthrough feature of Uniswap V3, developers can provide in any amount, thereby optimizing capital.
For example, like the LP token DOLA/ETH pair, with the ratio ETH = 3723 DOLA.
Since DOLA is a stablecoin, I will focus on liquidity near that price range, and have chosen to offer a range from 3600 DOLA/ETH to 3800 DOLA/1 ETH. If the ETH price rises or falls outside of that range, the developer will not be entitled to the fee.
Developers can also choose +0.1%, -0.1% buttons to adjust the price accordingly.
Step 4: Approval and Transfer of Liquidity.
After completing the above 3 steps and checking carefully, select Allow and Migrate, and accept in the non-custodial wallet.
Instructions for providing liquidity on Uniswap v3
To provide liquidity in Uniswap V3, developers follow these steps.
Step 1: At the main screen of Uniswap, select Pool choose New Position.
Step 2: Fill in 4 information to provide liquidity. Consists of:
- Choose a token that provides liquidity.
- Select Fees.
- Select the Range that will provide liquidity.
- Choose the amount that will provide liquidity.
(2.1) Choose a token that provides liquidity. Select 2 tokens developers want to provide liquidity
(2.2) Select Fees. There will also be 3 fees for the option: 0.05%, 0.3%, 1%.
(2.3) Select the price range you want to provide liquidity. Choose the price range where the price will move mostly around that area.
For example in this case, when the ETH price is at 3500 DAI, it is possible to choose to provide liquidity at the price of 1 ETH equal to 3000 DAI – 4000 DAI.
(2.4) Select the amount you want to provide liquidity.
Step 3: After completing the above 4 information, Just choose Approve + Add liquidity and confirm in Non-custodial wallet.
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