V3 Works Perfectly. So It Is Best Platform To Invest?
In this article, you will find an explanation of Uniswap V1, V2 and lasted one V3 so that you can understand how it works. It is very technical but very powerful.
It allows traders on the Ethereum network to use a new system of trading called an AMM to allow traders to trade with a pool of money at any point in time with very low fees.
Thus, they could theoretically trade for an infinite amount of coins.
How does all this trading happen? Uniswap was created using smart contracts, basically pieces of code that work on the blockchain and allow people to do really cool things that they can’t do with the bitcoin network.
For example, in, V1 you could give Uniswap 3000 USD, and they might give you one Ethereum. After that, you might give them 3000 usd again, and this time, they’d give you 0.8 Ethereum.
This is because since you bought Ethereum, the price of Ethereum went up, and the pool charged you more for it.
This is because since you bought Ethereum, the price went up. And because of that, the pool charged you more for it.
Other investors deposit the money in the pool. So basically, investors come along they deposit their money, and then you get to trade with their money. So now, version one had many different liquidity pools. But all of the pools had to contain at least Ethereum.
So, for example you could have a USDC and Ethereum pool and a basic attention token in Ethereum pool, among hundreds of other pools, however, if you wanted to trade USDC that you had for basic attention token that someone else, had you’d have to interact with each pool meaning extra work.
Version 2 fixed this problem by creating pools that don’t need Ethereum. So now we can create any pool that we want, including a USDC and basic attention token pool that allows us to swap tokens with one click. So now Uniswap basically became famous for this.
They grew literally exponentially for a while and then even became the most popular app on Ethereum, and its the code is so useful.
Have you ever seen one of those SpaceX rockets that go up, and then it comes back down and lands the same way it went up? I’m fairly certain that the same math used in those rockets is also used in Uniswap V3. That’s how complex it starts to get.
First off, Uniswap V3 was launched around march of 2021 on the Ethereum mainnet and the optimism main net. If you don’t know what optimism is, it’s a secondary network used to scale Ethereum. Read More…
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