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Tutorial: Uniswap (Beginners)

March 2, 2022
March 2, 2022

What is Uniswap?

Uniswap is a decentralised exchange designed to make exchanging Ethereum (ERC-20) tokens simple. It removes the need for a centralised intermediary, meaning users trade their funds through peer-to-peer markets.

A big issue faced by users on all Ethereum-based apps, Uniswap included, is the expensive gas fees (i.e. transaction fees) on the Ethereum network. For an overview of Ethereum gas fees and why they have become so high, click here.

As a way of working around this issue, the latest version of Uniswap (v3) supports the use of Ethereum Layer 2 networks. 

In simple terms, Layer 2 is a term used to describe a framework or protocol that is built on top of a Layer 1 blockchain (e.g. Ethereum). These Layer 2’s facilitate cheaper and quicker transactions on the Ethereum blockchain by offloading a lot of the storage and computational pressure Ethereum currently suffers from.

Therefore, rather than acting as ‘Ethereum Killers’ as they’re sometimes labelled, these protocols actually complement the Ethereum network rather than compete with it.

There are three Layer 2 networks that are currently supported on Uniswap: Optimism, Arbitrum and Polygon. 

Optimism and Arbitrum: part of a group of Layer 2 solutions known as ‘Rollups. Rollups work by bundling or ‘rolling up’ and processing batches of transactions which are then submitted to the main Ethereum chain. For a more detailed overview on this, click here.

Polygon: technically a ‘side-chain’, not a layer 2. This is because Polygon uses its own native token (MATIC) in a proof of stake mechanism to verify transactions.

This tutorial will go over how to get set up and exchange tokens on Uniswap. We have a separate tutorial coming out on providing liquidity on Uniswap and the risks involved.

 Getting set up

Start by heading to Uniswap’s website and click the ‘launch app’ button. Your screen should now look something like this. 

 Next, click ‘connect wallet’. 

Uniswap supports a couple of different wallets; for this tutorial, we will go with MetaMask. If you don’t already have a MetaMask wallet, click here for a full beginners tutorial on how to set up and use the browser extension version of MetaMask.

When you select MetaMask, a pop-up screen like this should appear.

Once you unlock your MetaMask wallet, it will automatically connect to Uniswap.

You will be set to trading on the main Ethereum network by default. If you want to trade using one of the other network options, you will need to add the network to your MetaMask.

To do this, simply click on the Ethereum tab and select the network you want to use in the drop-down menu that appears.  A pop-up screen like this should then appear asking for permission to approve the network. 



Transferring assets from the Ethereum Mainnet to Layer 2s

Although your wallet’s address remains the same across all networks, any assets in your wallet on the Ethereum Mainnet do not directly transfer over to these networks.

If you have some assets in your MetaMask on the Ethereum Mainnet, you can bridge these assets over to the other networks. Taking Arbitrum as an example, start by clicking on the ‘Arbitrum token bridge’ option towards the bottom of the screen.

Once you select the MetaMask option, you’ll be prompted to approve the connection. Next, you will need to select the type and enter the amount of the token you want to send.

Once you click ‘deposit’, it should take no more than 15 minutes for the funds to arrive into your MetaMask on the Arbitrum network. Note that this process will require you to pay Layer 1 Ethereum gas fees. 


Transferring assets from centralised exchanges to Layer 2s

Some centralised exchanges like Binance or Coinbase allow you to send funds directly to the Layer 2 networks.

For example, on Binance, it is possible to directly send ETH to your MetaMask on the Arbitrum network. This enables users to avoid the Ethereum gas fees that are payable when bridging. For a simple guide on how to withdraw from Binance, check out our tutorial.

The network options for sending assets will vary depending on the exchange you use and the type of crypto you’re looking to send. For some types of crypto, there will be no option to directly send to an Ethereum Layer 2 network.

In this instance, some users choose to buy a different token that can be sent directly to one of the Layer 2s from the centralised exchange. Users will then exchange this token on Uniswap for the original token they intended to use. Although this process is slightly tedious, it is a way of saving on Ethereum gas fees. It’s up to you to decide what’s best for you!


Uniswap charts

 When you click on the ‘charts’ tab, you will be brought to a page that looks like this.

The ‘TVL’ graph to the left depicts the Total Value Locked, i.e. the current total value of tokens within liquidity pools across the Arbitrum network. The graph to the right displays the network’s total trading volume over the last 24 hours (i.e. in this example, $55.07 million worth of crypto was traded in 24hrs). The ‘top tokens’ and ‘top pools’ sections list tokens/ liquidity pool trading pairs from highest to lowest liquidity on the network. 

You can click on a token or liquidity poor pair to view charts specific to that token/pool.

Before trading on Uniswap, it’s a good idea to check these charts to see 1. if the token(s) you are looking to trade is supported on that network and 2. what the liquidity is like compared to the other networks. If there’s not a lot of liquidity, you’ll likely get a worse price for your trade. 


 Exchanging Tokens

Start by selecting the ‘swap’ tab.

Next, select the network you want to use. For this example, we’ll use Polygon. Simply select the token you want to swap and the token you want to swap it into. Once you enter the amount you want to swap, the corresponding amount of the token you’ll receive in exchange will be displayed.

Below this, you’ll see the estimated exchange rate. By clicking on the arrow next to the exchange rate, you’ll be able to see more details of the transaction. 

This includes the expected network fee and the ‘auto router’ option. The auto-router essentially routes your order through different applications and trading pairs to get you the best price. This is enabled by default, which we recommend leaving on.

When you click on the settings gear icon, the following pop up screen will appear.

Here you can set a specific slippage tolerance. Because we are using a decentralised exchange that is influenced by supply and demand, the price of the swap can vary slightly from the time you begin the transaction to the time it is processed. The slippage tolerance is used to represent the level of price fluctuation you are ok with. Uniswap will auto-generate a slippage tolerance rate for you, which we recommend leaving on.

There’s also the option to enable ‘expert mode’. If you turn this on, you won’t have to confirm transactions with your MetaMask wallet.

You can click ‘swap’ to process the transaction. Your tokens should shortly appear in your wallet!



Want to learn more about Ethereum Layer 2s? Check out our podcast episode or have a read of our pro article.


Disclaimer: THIS IS NOT FINANCIAL OR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

Ali O'Meara

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