DeFi Deep Dive — Uniswap, King Of the Ethereum Ecosystem

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The Uniswap protocol facilitates decentralized swaps of crypto-assets through an automated market maker (AMM) type design. The protocol has become one of the pillars of the DeFi ecosystem in Ethereum.
Unlike decentralized exchanges based on order books, in an AMM-type decentralized exchange (DEX) any user can act as a liquidity provider.
To do this, the user only has to deposit cryptocurrencies in pools that represent the different markets. In return, the user earns commissions. Therefore, the price of assets is no longer conditioned by the ask and bids placed in an order book.
At Uniswap, when a user becomes a liquidity provider by depositing their funds in a pool, they receive a token representing their stake. Every time someone executes an exchange through the protocol, they must pay a commission of 0.3%.
These commissions are distributed among the liquidity providers based on the number of crypto assets they have deposited in the pool.
So, in short, Uniswap allows users to swap both ethereum (ETH) and most compatible ERC20 tokens without the need for intermediaries. It also offers the possibility for users to contribute to the system’s liquidity with their own assets. In return, they receive the commissions generated by each swap as a reward. Source