With Crypto services broadening beyond borders every day, the search for their credibility doesn’t seem to cease. Today we shall consider another serious topic on Uniswap (review), finding out whether or not their platform is just another scam scheme or a legit platform. We may also consider how Uniswap works.
What is Uniswap
Uniswap is meant for Ethereum with a focus on ERC-20 token exchanging. In a broader context, Uniswap is a new Ethereum exchanger, recently they gave 400 tokens to each user who has done at least one even tiny transaction before 1st September. The giveaways are almost $3500 for each user.
Their aim is to breach the gap between Ethereum users by eliminating are a form of intermediaries and unnecessary forms of rent extraction. This is believed to improve Ethereum transactions by allowing fast and efficient trading.
According to information available on their main website, Uniswap makes “tradeoffs decentralization, censorship resistance, and security are prioritized”.
How Uniswap Works
This is an automated liquidity protocol, which has a constant product format and is implemented in the Ethereum blockchain as a system of non-upgradable intelligent contracts. It avoids the need for trusted intermediaries, prioritizing decentralization, resistance to censorship and safety. Uniswap is GPL-licensed open-source software.
“Pairs act as automated market makers, standing ready to accept one token for the other as long as the “constant product” formula is preserved. This formula, most simply expressed as x * y = k, states that trades must not change the product (k) of a pair’s reserve balances (x and y).
Because k remains unchanged from the reference frame of a trade, it is often referred to as the invariant. This formula has the desirable property that larger trades (relative to reserves) execute at exponentially worse rates than smaller ones.”
Overview of Uniswap’s Contracts
It is important to keep in mind that it is much more than the interface when viewing the Uniswap website. Uniswap standardizes the exchange of ERC20s with a number of intelligent contracts. Anyone can create an interface with these contracts and start exchanging with everyone else who uses Uniswap instantly.
Uniswap consists of two different types of contracts. The first is called an exchange agreement. The exchange agreements have a token pool and Ether, against which users can swap. The second type of contract is the contract between Factory and its Exchange Address which is responsible for creating new exchange agreements and registering an ERC20 token address.
Is Uniswap Scam or Legit
The first question that comes to the mind when transacting especially online is whether the platform is a scam or legit. To answer this question, It must also be added that Uniswap is open-source software licensed under GPL. Licensed here means there is some sort of regulations.
Uniswap has come to relieve some sort of burden from us and it a good addition to the many Crypto platforms. Have experience with them, please share with us.