![]() His inspiration to design the protocol arises from a post that came from Ethereum co-founder Vitalik Buterin. The protocol was launched in late 2018 by creator Hayden Adams, who is a software developer. Thus, there are no listing fees for ERC 20 tokens as well. Furthermore, there is no listing process for ERC-20 tokens on Uniswap due to its decentralised nature, and this enables the launch of any token if there is a liquidity pool for the traders. The difference between centralized cryptocurrency exchanges like Binance and Coinbase and a decentralised AMM cryptocurrency exchange like Uniswap is that there is no order book or a centralized party that facilitates the trades with the latter. ![]() Anyone who deposits an equivalent value of two ERC-20 tokens into the pool can become a liquidity provider for the protocol. Liquidity providers fund liquidity pools. AMMs are smart contracts that hold liquidity pools that you can trade against. ![]() This model relies on a mathematical formula to price assets instead of using an order book. The software used to run the exchange without an order book is a design known as an Automated Market Maker (AMM) model. A pool of two cryptocurrencies (for example, ETH-USDC), allowing traders to trade in and out of the pool without needing another person on the other side of the trade. Liquidity providers receive liquidity provider tokens (LPTs) in return for their deposits, which acts as a coupon letting them redeem their funds at any time, plus rewards. Users who lend their cryptocurrency to an AMM for people to trade with, in return for earning interest and other rewards. Traders then use these liquidity pools to trade, instead of trying to find a matching buyer or seller on the spot market. Uniswap works by incentivizing liquidity providers to provide collateral and make liquidity pools. Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
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