Dethroning Crypto Exchanges
In these past few weeks, I have heard nothing but Uniswap, Uniswap, Unisawp. Mainly because the DavinviJ15 token is available in Uniswap and because recently Unisawp was giving away a token that skyrocketed in a brief period of time. Crazy how these tokens skyrocket out of nowhere.
"Uniswap, dropped a share of its new governance token to everyone that had ever used it, even those whose transactions had failed."
It shouldn't be a surprise that there is always a new coin, token, or ICO that people become very excited about, and at times it seems like pretty crazy behavior. Nonetheless, we must keep in mind that coins and token are valuable because people make them valuable, thus the bull prices.
So, what is Unisawp?
"Uniswap is a decentralized exchange protocol built on Ethereum. To be more precise, it is an automated liquidity protocol. There is no order book or any centralized party required to make trades. Uniswap allows users to trade without intermediaries, with a high degree of decentralization and censorship-resistance."
Decentralized exchanges (DEX) has been something that has been spoken about for quite some time now. Developing a DEX is a breakthrough considering that the way to trade a liquidate your crypto is through exchanges. For most, this is not an issue, but for many, going through an exchange beats the whole point of why people love crypto. One of crypto's highlights is that decentralized money runs on a blockchain network, a revolutionary breakthrough in our monetary system. A currency with no third party involvement can be used anywhere in the world to access the internet. Nonetheless, its decentralization comes to a stop when users are obligated to purchase and sell crypto in exchanges. Government KYC protocols regulate these crypto exchanges, and you must have one in your country to liquidate your crypto.
So, are these DEX such as Uniswap the new alternative not use regular crypto exchanges?
How does Uniswap work:
"Uniswap leaves behind the traditional architecture of digital exchange in that it has no order book. It works with a design called Constant Product Market Maker, which is a variant of a model called Automated Market Maker (AMM)."
"Automated market makers are smart contracts that hold liquidity reserves (or liquidity pools) that traders can trade against. These reserves are funded by liquidity providers. Anyone can be a liquidity provider who deposits an equivalent value of two tokens in the pool. In return, traders pay a fee to the pool that is then distributed to liquidity providers according to their share of the pool." Learn More
It is a bit hard to understand, and I can imagine what it's like for a newbie; listening to never-ending possibilities within the crypto universe.
DEX's are for sure an excellent new way to trade; nonetheless, the cryptocurrency that is traded within the platform is in the form of ERC-20 Tokens; therefore, unlike regular exchanges, you won't be able to sell and liquidate immediately to fiat cash. Nonetheless, you have options such as selling and receiving Tether in exchange, thus exchanging it in your bank because it is a coin pegged to the USD.
Once we begin using crypto in our everyday lives, these DEX's will be our every day "bank," and we won't need centralized exchanges no longer. Thus I suggest we all give it a try!
By: Carolina Pérez