What is Uniswap: A Complete Review of Features, Pros & Cons

Home / Blog / Reviews / What is Uniswap: A Complete Review of Features, Pros & Cons

Since its launch in November 2018, Uniswap has become a pioneer in the DeFi space, allowing traders to seamlessly swap any Ethereum token for another.

Although many other decentralized exchanges have emerged since then, Uniswap remains the most prominent by a significant margin.

In this article, we will explore Uniswap in detail, covering what it is and how it functions, how to connect Metamask to Uniswap, how to withdraw money from Uniswap, is Uniswap safe, Uniswap fees, and more.

Table of Contents

What is Uniswap?

Uniswap is a decentralized exchange that enables users to trade cryptocurrencies without relying on a central authority. Those who use Uniswap govern it by holding a special token called UNI. These UNI token holders can vote on changes to the platform.

On Uniswap, users trade through pools of tokens provided by other traders, rather than a traditional order book system. While Uniswap Labs, a company based in New York, builds and maintains the app, the platform itself is controlled by the community. Hayden Adams, the creator of Uniswap, is a well-known figure in the crypto world and often shares his thoughts on the industry.

In short, Uniswap is both a decentralized exchange and a cryptocurrency. As the fourth-largest DeFi platform, Uniswap allows users to trade any ERC-20 token without needing a middleman. Now, it also supports networks like Polygon and Optimism, which offer cheaper transactions.

What makes Uniswap different is that it doesn’t charge fees to list new coins like traditional exchanges do. Users keep full control of their funds and private keys, which lowers the risk of losing assets if a hack occurs.

Uniswap pros and cons

Uniswap caters to both seasoned traders and beginners alike. However, newcomers should be mindful of the price impact on their trades. Luckily, Uniswap provides a clear indication that the price impact is significant.

👍Pros	👎Cons
Wide range of blockchain networks supported	ETH-compatible crypto only
Low-cost trades	PoW process is time-consuming and energy-intensive
Earn UNI tokens by holding, rather than selling crypto	Must have ETH to cover transaction fees
No KYC or AML requirements	Not very beginner-friendly

What is UNI?

UNI is the governance token for Uniswap, introduced to give the community a say in the protocol’s future and development.

Launched in September 2020, Uniswap distributed UNI tokens uniquely by “airdropping” 400 UNI to every Ethereum address that had previously used the platform. Over 250,000 Ethereum addresses received this airdrop, valued at nearly $1,400 at that time.

Airdrops have since become a popular method for DeFi projects to reward their users. Uniswap plans to distribute a total of 1 billion UNI tokens over four years.

How does Uniswap work?

Uniswap is built on the Ethereum blockchain and uses smart contracts — automated programs that handle complex transactions. Using the Uniswap app or website will allow users to trade a wide variety of digital assets directly on the platform.

A key feature of Uniswap is its use of liquidity pools. These are pools of cryptocurrencies or tokens provided by users, locked in smart contracts to facilitate trades on the exchange. This system enables seamless trading without the need for a central authority.

Uniswap continuously updates its blockchain with the latest trade data, operating as an automated market maker. Unlike traditional exchanges, it doesn’t rely on a central entity to manage trades.

Uniswap offers several ways for users to participate:

Create new markets. You can use smart contracts to create markets for trading new pairs of digital assets.
Swap assets. You can trade digital assets through existing decentralized markets on the platform.
Provide liquidity and earn rewards. By staking your digital assets in liquidity pools, you can earn UNI tokens as rewards.
Participate in governance. UNI token holders have the power to vote on changes and updates to the platform.

In short, Uniswap is a user-driven platform that allows for decentralized, secure, and flexible trading of digital assets.

Uniswap key features

Uniswap stands out for its simplicity and wide range of features, even though other decentralized exchanges offer similar functions. Here’s what makes Uniswap accessible and valuable:

Vast ecosystem. Uniswap has hundreds of DeFi apps, integrations, and tools built on the Uniswap Protocol that you can easily connect with your Uniswap account.
Сrypto swap. Swapping on Uniswap is seamless and user-friendly. Uniswap automatically reads the balances in your connected wallet, allowing you to easily view and select from your available tokens when making a trade.
Deep liquidity. Uniswap’s established position in the market means it has large liquidity pools, reducing the chance of major price changes during larger trades.
NFT market. Uniswap also functions as an NFT aggregator, allowing you to search and find NFTs from various top marketplaces.

Overall, Uniswap combines a user-friendly experience with extensive options and deep liquidity, making it a great choice for both new and experienced traders.

Uniswap fees and commissions

Network fees: Vary depending on the network, with Ethereum transactions generally being more expensive than those on networks like Polygon (MATIC).
Swap fees: Range from 0.01% to 1%, depending on the specific trade.
Purchase fees (MoonPay): 2.55% for US debit cards and 3.25% for US credit cards, with international fees varying.

Uniswap’s trading fees are competitive compared to centralized exchanges. For example, most swaps on Uniswap cost 0.3%, while Coinbase Advanced charges 0.6% for market orders if your 30-day trading volume is below $10,000.

However, fees on Uniswap can increase if you use the Ethereum network during times of high gas prices. To save on costs, you can opt for faster and cheaper networks like Polygon.

FAQ about Uniswap

Is Uniswap safe?

Uniswap is a decentralized exchange that relies on blockchain technology, which generally enhances its security. The platform uses smart contracts designed to be immutable, but vulnerabilities can still arise. In 2023, Uniswap faced significant security breaches, resulting in losses exceeding $25 million.

How to buy Uniswap?

If you want to buy Uniswap or invest in Uniswap, you can do that by buying UNI tokens. The simplest way to purchase UNI is through a centralized cryptocurrency exchange like Coinbase or Kraken. Alternatively, you can buy UNI directly on the Uniswap platform by exchanging another cryptocurrency, such as Ethereum.

How to connect Metamask to Uniswap?

In case you want to know how to use Uniswap with Metamask, we have taken care of this. To connect your MetaMask wallet to Uniswap, start by opening the Uniswap app. Once you’re on Uniswap.org, click on “Launch App” in the top right corner to get started.

When you do this, you’ll be prompted to connect a wallet. Click on “Connect” or “Connect Wallet,” and a list of wallets supported by Uniswap will appear. Select MetaMask, enter your MetaMask password, and you’ll be connected.

If you don’t have a MetaMask wallet yet, check out our guide on MetaMask review for more and detailed information.

How to withdraw money from Uniswap?

To your question on how to withdraw money from Uniswap we have prepared a step-by-step small guide:

Ensure your Web3 wallet is connected.
Visit the Uniswap website and navigate to the “Pool” section.
You’ll see all your Liquidity Pool positions displayed on the interface.
Choose the position you want to withdraw from.
Click “Remove.”
If it’s your first time withdrawing from a pool, you’ll need to approve the transaction through your web3 wallet.

Conclusion

Decentralized exchanges like Uniswap can be user-friendly and, in some cases, even simpler than centralized exchanges like Coinbase and Gemini. One key advantage is that you retain control of your crypto by keeping it in your own wallet, rather than relying on a centralized platform.

Uniswap also offers added benefits like the ability to trade NFTs and earn rewards through liquidity pools. However, one downside is that it can be harder to track your trades compared to using centralized exchanges.

Want to learn more about other crypto exchanges to compare and choose the best? Check out these posts: