Listing on the Uniswap Exchange - what should you know - Empirica (2024)

What exactly Uniswap is?

Decentralized exchanges (DEX)have been a rising alternative to centralized exchanges in the cryptocurrency market. Unlike centralized exchanges, DEXs do not require intermediaries or custodians to facilitate trading. However, blockchain technology limitations have made it difficult for DEXes to compete with their centralized counterparts, until now.

Uniswap, an Ethereum-based decentralized exchange protocol, has revolutionized the industry with its automated liquidity protocol. Liquidity providers create liquidity pools where ERC-20 tokens can be swapped seamlessly without needing an order book. Uniswap charges no listing fees and can be considered a public good (however, setting up a pool costs up to $1000 in ETH if the gas is high)

Uniswap is a digital exchange that uses a Constant Product Market Maker design, a variation of the Automated Market Maker model. Liquidity providers fund these reserves, and the pool charges traders a fee, divided among liquidity providers according to their shares. Uniswap is currently the leading DEX by trading volume, and there are currently three versions, with V3 being the latest.

To swap one coin for another on Uniswap, head over to their official site and connect your crypto wallet, specifying the coins you wish to swap. However, transaction fees on Uniswap can be high, with the average gas cost being about $7.5 on the Ethereum network. Other popular crypto exchanges feature cheaper transaction fees.

Uniswap is running on liquidity pools

Liquidity pools are the base for the model of conducting transactions in the world of decentralized finance. It’s called AMM – automated market maker – which means the whole market-making process is now automated.

1. “When a trader wants to conduct a sell transaction, she relies on the liquidity pool provided by the blockchain project and DeFi farmers.
2. If the token A is sold, the amount of A is increased in the pool, and the amount of B is reduced (because the ultimate state of valuation is always 50% / 50% ratio)
3. When token A is bought, there are fewer A tokens in the pool and more B (the ratio of the token amount is changed, but the value will stay at 50 % / 50%). “

We made an entire article on that!

To list your DeFi token on Uniswap, there are a few steps you need to take care of. First, install MetaMask and deploy your ERC20 token contract to Ethereum mainnet.

Then, send your ERC20 tokens to your MetaMask wallet. Once you have completed these prerequisites, you can follow the steps below to list your DeFi token on Uniswap.

Step 1: Create an Exchange

To create an exchange for your token, you need to follow the steps below:

• Go to https://uniswap.exchange/ and connect with your MetaMask wallet.
• Select the “Pool” option on the upper right corner of the screen.
• Choose “Create Exchange” and press the “Select a Token” option.
• Enter your token’s address in the “Search Name or Address” field and select your token from the dropdown.
• Click on the “Create Exchange” option and confirm the pop-up that appears.

Step 2: Add Liquidity

Now that you have created an exchange for your tokens, it’s time to add liquidity. This means depositing both ETH and your own token. The price will be set according to how many tokens you deposit. To add liquidity, follow these steps:

• Click on the dropdown on the same page and press “Add Liquidity.”
• Input the amount of ETH you wish to deposit.
• Select the “Select a Token” option and enter your token’s address in the “Token Address” field.
• Press the “Unlock” option, enter the amount of your tokens you wish to deposit, and check the calculated exchange rate.
• Confirm your transaction by clicking “Add Liquidity” and the pop-up that appears.

Congratulations! You have now listed your token to the Uniswap exchange.

To swap your token for ETH, follow these steps:

• Go to the Uniswap exchange page and connect with your MetaMask wallet.
• Choose “Swap” and select the token you want to swap in the “From” field

Now, let’s discuss how to set the price when listing a token on Uniswap V3. It can be quite confusing to determine the price range, especially when the token is being listed on the DEX for the first time, without any transaction history. Newbie projects may not know whether to use V3 or V2 for setting the price range.

In reality, both options have their own advantages and disadvantages.

For low and mid-volume volatile pairs, it’s usually best to use Uniswap V2 and set a full range. For higher volume pairs, however, it may be more advantageous to concentrate the range by utilizing Uniswap V3. If you have limited capital, it’s generally less expensive to establish a price range using Uniswap V2 rather than Uniswap V3. This is because adjusting price ranges with Uniswap V3 can result in higher gas costs over time.

When listing on Uniswap, token projects can become easy targets for sniping attacks in the process of setting up a pool. Sniper bots monitor the blockchain, looking for pool creation blocks, and try to enter between pool creation and the first liquidity mint, changing the initialization price. With the changed initialization price, they are able to buy part of the token treasury at a low price with the intention of dumping it shortly after. That leads to losses incurred by a token project or an initial liquidity provider.

The second consequence of a sniper attack is significant initial price volatility. It disrupts the natural price discovery process and records prices that do not accurately reflect the market’s perception of the token’s value, giving misleading signals to investors who may associate the token with a higher level of risk and instability.

At Empirica, we have developed a tool to mitigate the risk of a sniper attack during the pool creation process. Schedule a callwith us to discuss this topic before listing your token.

Uniswap is a great first exchange to consider because it offers several advantages for investors over traditional crypto exchanges.

First, you can trade anonymously, which means you don’t have to reveal your identity. You can also trade directly from your wallet, and the only identifier required is your public wallet address.

In terms of general security, Uniswap is very reliable. The protocol is non-custodial, which means it doesn’t hold any funds, and its smart contracts have been audited by several teams. This makes it more secure than other exchanges that hold your funds.Since there are no intermediaries involved, all trades take place directly from your wallet, which makes you responsible for your tokens and private keys. This means you have complete control over your funds and can trade without any third-party involvement.

Uniswap also offers instant access to new tokens, allowing you to create ERC20 tokens and pair them with ETH to produce liquidity for new pools.

How to choose the best DEX exchange?

If you’re new to the world of decentralized exchanges (DEXs), choosing the right one to list on can be overwhelming. But don’t worry, I’m here to help.

Firstly, you’ll want to check out the fees. Nobody likes paying fees, so it’s important to find a DEX that offers transparent information about its fees. Avoid any platforms that don’t provide clear information.

Next up is security. While your funds aren’t held by the exchange, you want to make sure the DEX you choose takes security seriously. Look for a platform that uses the latest and most reliable security software.

Make sure the DEX supports the coins you want to trade. If you’re interested in exploring new assets, choose a platform with a broad range of cryptocurrencies. But if you prefer to stick with the tried and tested assets, any of the top five exchanges should suffice.

Consider the payment methods supported by the DEX. It’s important to be able to buy crypto using a convenient payment method, especially if you’re new to the game. So, look for a DEX that supports your preferred payment method.

Don’t overlook customer service. Having someone helpful and responsive on the other end of the line can make all the difference when things go wrong.

Finally, read customer reviews. Search for “best decentralized exchange Reddit” to find discussions among crypto enthusiasts who have tried and tested various exchanges and chosen the best one for their needs.

By paying attention to these key factors, you can make an informed decision and avoid any unwanted surprises.

Active management of concentrated liquidity

While many tokens try to provide liquidity to their pools, itoftenresults in inefficient capital usage or considerable losses. We support tokens by providing continuous liquidity provision maintaining a minimalslippage andensuring uninterrupted trading opportunities for investors.

Piotr explains how we work. Learn what is the difference between passive and active management of concentrated liquidity on DEX platforms based on examples from Uniswap V3. Piotr demonstrates how we manage token liquidity with efficient use of capital achieving the same results with less burden on token project’s treasury.

Enjoy the video!