Uniswap is one of the largest decentralized exchanges that allows anyone to trade crypto assets and provide liquidity to earn trading fees. Uniswap v3 is the latest version that supports ERC-721 tokens, introduces a new concentrated liquidity model, and includes a flexible fee structure.

Dexes

Uniswap V3

Protocol Code Quality

Protocol Maturity

Protocol Design

Risk Rating

green

Best

* [Documentation](https://docs.uniswap.org/) 
 * Auditors 
 	* [Trail of Bits](https://github.com/Uniswap/v3-core/blob/main/audits/tob/audit.pdf) 
 	* [ABDK](https://github.com/Uniswap/v3-core/blob/main/audits/abdk/audit.pdf) 
 	* [Audit 2](https://github.com/Uniswap/uniswap-v3-periphery/tree/main/audits) 
 	* [Audit 3](https://github.com/ConsenSys/Uniswap-audit-report-2018-12) 
 	* [Audit 1](https://github.com/Uniswap/uniswap-v3-core/tree/main/audits) 
 * Please see our [FAQ on experienced auditors](https://help.exponential.fi/en/articles/6381015-what-are-experienced-auditors)

Exploit/Hacks

None

* [Website](https://uniswap.org/)  
 * Token: UNI  
 * Tags: Dexes

Info

* TVL: $2.9B (Rank #7)  
 * TVL Ranking by Dexes: #2  
 * Blockchain: Ethereum, Polygon, Arbitrum, Optimism, Celo  
 * Chain TVL  
 	* Ethereum: $2.24B  
 	* Polygon: $96.22M  
 	* Arbitrum: $76.22M  
 	* Optimism: $41.51M  
 	* Celo: $1.11M

Key Metrics

Information


- Code reviewed by several experienced auditors including [Trail of Bits](https://github.com/Uniswap/v3-core/blob/main/audits/tob/audit.pdf) and [ABDK](https://github.com/Uniswap/v3-core/blob/main/audits/abdk/audit.pdf)
- Public team promotes accountability
- No documented protocol hacks since launch


- Core protocol launched in 2018; maturity over 2 years minimizes technical risk as smart contracts are amongst the most battle-tested
- Top 1% by total value locked reduces risk
- Decentralized governance increases transparency
- Low voting power concentration reduces risk


- No concerns identified
- Uniswap is one of the most copied protocols in DeFi as it pioneered the concept of automated market makers (AMMs), as well as the concept of concentrated liquidity (Uni V3) that lets you choose your own price range to provide liquidity

Risk Assessment

The team at Uniswap transformed the concept of a decentralized exchange (DEX) into one of the most game changing DeFi building blocks created thus far.

What we like

The developer team still has a lot of control on the protocol's future through back-door switches and difficult governance thresholds. Using the latest version of Uniswap has a higher learning curve than other protocols as users have to specify multiple custom parameters.

What we like less

Uniswap is the most popular DEX in DeFi, and provides an amazing opportunity for you to generate yield through market making given the high volumes at low risk.

What it means for you

Summary

#### How Uniswap works
Uniswap enables the creation of liquidity pools to swap one token for another. Investors can provide liquidity in pools directly from their wallets and earn yield on swaps. All interactions with Uniswap are fully transparent as they are on-chain. It is based on the Automated Market Maker (AMM) model which uses a constant product curve (x * y = k) to determine the exchange rate based on the ratio between the two assets, the trade size and the amount of liquidity within the pool. The liquidity pools charge a fee on every trade. The latest version (Uniswap V3) offers users the ability to select the lower and upper price ranges where they wish to provide liquidity on a specific pool (a.k.a. concentrated liquidity).
#### How Uniswap makes money
Uniswap makes money via protocol fees that can be optionally turned on by UNI holders through a community governance proposal. Whenever a liquidity pool is created, protocol fees are set to 0 by default. Uniswap could then receive a fraction of these transaction fees. Currently, the protocol does not charge protocol fees and all fees are earned by liquidity providers.
#### How you make money on Uniswap
In order to incentivize users to create trading markets on their platform, Uniswap must pay these users who are providing liquidity into these pools in the form of swap fees. Uniswap currently distributes all of the swap fees earned for each pool directly to the liquidity providers that is proportional to the amount they deposited. For Uniswap V3, the fee tiers charged for every transaction are 0.01%, 0.05%, 0.30%, or 1% depending on the specific pool.