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Uniswap Tutorial – A Simple Three Step Guide

This simple and useful three step Uniswap tutorial will show you how to buy an erc-20 token with Ethereum on Uniswap.

What is Uniswap?

Uniswap is a decentralized exchange built on the Ethereum network where you can exchange ERC-20 tokens. The Uniswap protocol was invented by Hayden Adams, but Vitalik Buterin, the creator of Ethereum, came up up with the original idea. 

At its core, Uniswap is designed to help solve exchange liquidity issues, creating an environment to buy and sell tokens using the “Constant Product Market Maker Model.” Uniswap uses a constant equation to represent the quantity of ERC-20 and ETH tokens available in the liquidity pool. This equation coupled with supply and demand determines the price of a token at any given time. Since Uniswap is based on this constant model, price on a token can only change if trading occurs. More information here in Uniswap documentation.

Why is this Useful?

Recently, Uniswap gained a lot of popularity with tokens like $TEND, $YFI and now with $UNI. This has brought along a large community. These tokens can easily be traded using the Uniswap protocol. Below, is a step by step tutorial for trading on Uniswap. Any ERC-20 token can be listed on Uniswap as it is a permissionless, decentralized protocol. Each ERC-20 token must have its own smart contract, and liquidity pool. Once this is established, this token can be traded on Uniswap. Uniswap is very user friendly, and connecting to Ethereum wallets such as MetaMask or Coinbase to swap tokens or add tokens to a liquidity pool is fairly simple. 

How to Exchange a Token on Uniswap

Step 1.

First, create a wallet at Meta Mask or Coinbase Wallet and then head over to Uniswap. You will select “connect a wallet” at the top right, and then connect it to an Ethereum wallet of your choice. In this case, I am using Meta Mask. Meta Mask wallet is relatively easy to set up, and if you set up a new wallet, ensure you backup your private key offline. 

Step 2.

Find an ERC-20 token of your choice to exchange, in this case for the purpose of this tutorial, I am trading ETH for CRV tokens. You may need to custom import the token you are trading on Uniswap. If you are custom importing a token into Uniswap, simply add the project’s token address to the search bar of Uniswap and go through the steps to import the token. 

Step 3.

Be wary of fees on the transaction, as trading fees on the Ethereum network have been skyrocketing. Once the transaction is confirmed, the traded tokens will appear in your wallet of choice. From there, you can hold, trade, send, etc with your purchased tokens. Check out https://uniswap.info/ for more detailed information on new coins.

Conclusion

To wrap up, Uniswap is a new, decentralized exchange on Ethereum. The tutorial above is just a starting point to trading and I will write another for yield farming on Uniswap. Be careful, and always use proper risk management.

Check out our Idiot’s Guide to Earning Free Cryptocurrency if you are interested in learning how to earn free crypto.

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