What is Uniswap?
Uniswap V2 is the newest iteration of the Uniswap protocol, a decentralized exchange based on pools of tokens from liquidity providers. Argent's integration helps you to earn fees, as well as Uniswap's UNI tokens, for becoming one of those liquidity providers, depending on the pool.
While Uniswap has emerged as one of Ethereum's most important projects, you should note that it is one of the more advanced use cases in Argent. Calculating fees can be complex, and the economics of being a liquidity provider mean it is possible to withdraw fewer assets than you put in. This is discussed in more depth below.
Why does Uniswap matter?
As Uniswap says, it is "transparent, censorship-resistant financial infrastructure for Ethereum". Anyone can swap tokens, add tokens to a pool to earn fees, or list a token on Uniswap.
This means that anyone can create new markets, provide liquidity, and build new financial applications on the Uniswap protocol.
How can I add liquidity to Uniswap with Argent?
To add liquidity, just open the Invest tab in Argent, select Uniswap and choose a liquidity pool.
To make the process easier, you only need to add one of the asset pairs (either ETH or the pool's token) that the pool requires. We then automatically split it into two tokens for you. You will also need additional ETH to pay for the gas though.
It's important to note that adding liquidity is one of the most advanced use cases available through Argent. Due to shifts in the composition of the pools due to trading, you should be aware that it is possible to withdraw less than you put in.
How can I earn UNI tokens through liquidity mining in Argent?
Projects use liquidity mining to incentivize people to contribute liquidity to them; they do this by rewarding people in tokens. From 18th September 2020 Uniswap are launching a liquidity mining program for four pools:
To earn UNI:
- Open Argent and participate in one of the four pools listed above
- Go to: https://app.uniswap.org/#/uni
- Click 'Connect to a wallet'
- Choose 'WalletConnect' and connect your Argent wallet by scanning the QR code
- Deposit your UNI-V2 liquidity provider tokens in the pool you chose
- To claim your UNI tokens, you can either click 'Claim', or you'll get them automatically when you withdraw.
5,000,000 UNI will be allocated per pool to liquidity providers, proportional to the amount of liquidity they provide.
This will initially run until November 17 2020 (12:00am UTC). Further details are provided on the Uniswap blog page.
If you have used Uniswap before September 1st you may also be eligible to claim UNI tokens. See here for more details. Please note that you need enough ETH in your wallet to pay the transaction fee to claim your UNI.
How does Uniswap work?
The Uniswap protocol is made up of a series of smart contracts that hold pairs of tokens.
These smart contracts let you exchange any ERC tokens quickly and securely.
Anyone can earn a commission for contributing their tokens to a 'liquidity pool', which ensures tokens are available when needed.
A 0.3% fee is charged whenever a swap is made. Depending on how much you have contributed to the pool, you will receive a proportion of this fee (more details here).
While most exchanges work on an order book model - where the price is determined by the highest buy price and the lowest sell price - Uniswap uses liquidity pools, where the price comes from the ratio of Ether to tokens in a pool.
The price of a token on Uniswap is kept in check by arbitrage. For instance, if a token is priced too low, a trader can buy it and sell for a profit on another exchange until the price is balanced out.
Where can I go to learn more?
- For an introduction to Version 2 of Uniswap, check out this post.
- Here's Uniswap UNI token announcement.
- You can find in-depth documentation here.
- For more information on returns, see here.
- You can use this tool to track Uniswap ROI.