Uniswap Guide

So you may have stumbled upon Uniswap and are now thinking that it might be worth knowing what it is all about. This article aims to show you how to use this platform to trade, some helpful tools as well as the advantages and disadvantages of using a decentralised exchange (DEX). These exchanges have been around for quite some time, however Uniswap is the first DEX that has really made a mark in the crypto world.

Uniswap runs on smart contracts and this allows you to do a few different things that make the DEX run. You can provide liquidity earning fees from each trade that takes place, remove that liquidity and trade tokens yourself. When you trade, tokens come and go to your wallet directly which is a big plus as you are not reliant on a third party looking after them. Over the years there have been some seriously big consequences for holding tokens or coins on a centralised exchange (CEX) and Coincheck or Mt. Gox are great examples that totaled close to $1,000,000,000 USD in losses.

Here is a list of Pro’s and Con’s for trading on a DEX such as Uniswap.

Pros

1. No Know Your Customer (KYC) — No need for it as you do not need to go through the tedious sign up process on centralised exchanges such as Binance. The only information people will ever see is a public wallet address as you trade from your wallet directly.
2. Trust — Compared to your normal CEX when you place a trade on Uniswap it leaves your wallet and comes back to your wallet. No need to trust your portfolio with a third party.
3. Secure — Uniswap does not hold funds, and because it runs on smart contracts it is as secure as the ethereum blockchain. No fear of an exchange going down, wallets under maintenance or minimum withdrawal fees.
4. Tokens — Anyone can list a token. No listing fees or negotiation with big exchanges is required.
5. Time — It is far quicker to buy on a DEX compared to a CEX and each step has fees associated with it.

CEX

1. Buy ether
2. Send to your wallet
3. Send to exchange wallet
4. Trade
5. Withdraw sending back to your wallet or trust the exchange leaving tokens/coins in their wallet
6. If leaving on exchange sell when desired to move back to your own wallet, or if you store tokens/coins in your own wallet, send back to exchange to sell and withdraw back to your wallet again after the trade is complete

DEX

1. Buy ether on your local exchange or directly through Metamask.
2. Send to wallet if not bought through Metamask.
3. Trade on Uniswap — Your new tokens/coins go back to your wallet immediately.

Cons

1. Transaction fees — They swing wildly from low to high when there is peak demand and congestion on the blockchain. By swing wildly I mean from as little as $1.50 to over $100 on rare occasions.
2. Tokens — As easy as it is to list a token for a genuine project/business it is just as easy to list a scam token. When a genuine token comes along so do ten almost identical scam tokens attempting to fool you and take your money. Thankfully there are easy ways to prevent this from happening which I will touch on later.
3. Failed Transactions — If you don’t set your gas limit high enough then it may never get confirmed on the blockchain and fail. This can occur frequently with new token listings when people are frothing at the mouth to buy the second it becomes available to trade. Do not buy a new listing unless you really know what you are doing or you don’t care and treat DEX’s like a casino.
4. Bots — If you place a large enough order, bots can front run your transaction for a quick profit. What this means is that when you place a trade on the blockchain a bot can see it, spend a higher amount than you did on gas to push their transaction through first. Then as soon as your transaction goes through the bot sells instantly making a quick profit selling at the higher price you paid.

So now we know the Pros and Cons of a DEX it is time to learn how to use Uniswap so you can moon shot your investment on an unknown token that is touted/shilled all over the cryptosphere and make it big or blow it all and wait impatiently looking for that next big potential payoff.

1. The first thing we need to do is get a wallet, specifically a Metamask wallet. This wallet interacts with Uniswap directly and makes things incredibly easy. So head over to https://metamask.io/ and download the appropriate version required.

Some browsers (i.e. Chrome, Firefox) even allow you to add Metamask as an extension. This can be accessed within the browser and if approved connects direct to Uniswap.

2. Buy some Ether on your local exchange and send it to your Metamask wallet. Another option is to buy directly through Metamask using Wyre. Simply click on buy in your Metamask wallet.

Keep in mind that you will need Ether to perform transactions as all tokens on Uniswap run on the Ethereum blockchain so be careful not to run too low. To find out how much you need to spend on each transaction head over to https://ethgasstation.info/ which tells you how much you will need to spend.

If you are more of a risk taker like myself, simply put in a number far bigger for gas using the advanced options tab in metamask when looking at the transaction fee. When the transaction is sent to the blockchain it will only use what is required, so even though you put in a higher amount it will never use all of it (based on my personal experience over the years). There is a risk something could go wrong that is unforeseen so if you are not sure, keep the gas limit where you are comfortable.

1. Now we have money in our metamask wallet. Head on over to https://uniswap.org/ and have a look around. Under the ‘Products’ tab at the top right you will find ‘Analytics’ and ‘App’. Click on ‘App’ or ‘Use Uniswap’ in the top right and now you will be looking at the uniswap platform with the important parts that we need shown below.

If you are not already connected to uniswap with metamask, select ‘connect wallet’. You will have multiple options to pick from, but we want to select Metamask. Enter your password to login.

4. Now we are connected to Uniswap, either select a token that you wish to purchase from the drop down list, or get the correct contract address and paste it into the bar at the top of the token list to make sure you get the right one and agree to import it to your token list.

Before going through with a trade, take care to make sure everything has been setup correctly. Below is a brief explanation.

1. FROM — The amount you are sending from an existing token balance with ETH shown here.
2. This arrow is to select the direction of the transaction, clicking on it will change the direction of the trade.
3. TO — The amount of tokens you will receive when initiating the trade.

5. Now you have selected the token you wish to purchase click on SWAP, confirm the transaction and off to the blockchain it goes! Confirmation times for the transaction will completely depend on what you have set for your gas limit. Please note, that if the liquidity is low the buy price can change very quickly if you are trying to purchase a token that has just been listed. To solve this, select the cog at the top right and increase slippage. This may affect the amount of tokens you receive but increases the chance of the transaction completing.

Taking a trip back to step 3, ‘Analytics’ is there to get a basic overview of the token price history. It is handy, however you are far better off using https://www.dextools.io/app/ as this gives you far more detail about the token you are looking at. While having a look around on dextools, search for your token of interest and look at the vast amount of information available beside the ticker symbol. REMEMBER! — Search for your token using the contract address in the search bar and not by typing its name. This will avoid the risk of looking up a scam token. If you do search by name, make sure to verify the information is correct utilising those links next to the ticker symbol. Going back to the Cons list for a moment, dextools will also show transactions that have been front run by bots in the trade.

Another great tool to use to verify the contract address is correct is https://etherscan.io/ and entering the contract address into the search bar. Once you get the search results, make sure the numbers make sense to you, and select holders below to see that there are a decent amount of holders to help verify that it is the genuine token. The safest option is to always get the token address directly from the team directly.

Below is a list of tools including some that I have shown previously to aid you in making the correct choices. Hopefully this guide has been of use to you in your moon shot journey. Good luck out there in the cryptosphere and remember in DEFI it really is the Wild West.

Tools

Uniswap — https://uniswap.org/

Metamask — https://metamask.io/

Coingecko — https://coingecko.com/en

Etherscan — https://etherscan.io

Ethgasstation — https://ethgasstation.info/

Dextools — https://www.dextools.io/app/