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What is Uniswap?

1 min read Updated

Uniswap is the largest decentralized exchange by volume, pioneering the automated market maker (AMM) model — enabling permissionless token trading through liquidity pools on Ethereum and multiple L2s.

WHY IT MATTERS

Uniswap didn't just create a DEX — it created a new market structure. The constant product AMM proved that algorithmic liquidity could replace order books for most trading needs. V1 was a proof of concept, V2 made it practical, V3's concentrated liquidity made it competitive with centralized exchanges.

Uniswap processes billions in monthly volume across Ethereum, Arbitrum, Optimism, Base, Polygon, and other chains. The UNI governance token gives holders control over protocol parameters and a substantial treasury.

Uniswap V4 introduces hooks — customizable plugins that modify pool behavior — enabling limit orders, dynamic fees, TWAP orders, and other features through a modular extension system.

FREQUENTLY ASKED QUESTIONS

How does Uniswap make money?
Trading fees (0.01-1% depending on pool) go to liquidity providers. Uniswap Labs charges a frontend fee (0.15%) on certain pairs through its interface. The protocol itself can activate a fee switch through governance.
What's new in Uniswap V4?
Hooks — smart contract plugins that customize pool behavior. This enables dynamic fees, limit orders, custom oracles, and more. All pools share a singleton contract for gas efficiency.
Can I create a pool for my token?
Yes. Anyone can create a Uniswap pool for any ERC-20 token pair. You set the initial price and provide the initial liquidity. No approval or listing process needed.

FURTHER READING

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