Technology

How to Make Money on Uniswap

Before the advent of money protocol, financial institutions like banks do this job. But within these institutions, CEOs, CFOs, accountants, and lots of other overhead is involved. Initially, Uniswap was cofounded by a 20-year unemployed person as his first programming project

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The following year after its inception, the amount of trade through this platform reached $22m per week and it surged to $26m on a weekly basis after a couple of years. From the trading volume perspective, Uniswap exceeds its competitor and has evolved as the highest decentralized exchange.

After the advent of these decentralized exchanges, peoples can leverage the power of the internet to do a plethora of valuable tasks such as:

·         Earn a little bit of extra cash by risking their crypto assets as liquidity

·         Exchange their crypto holding with others and trade with their peers.

·         Devise a new market by listing an asset

Since Uniswap protocol was built at the top of Ethereum, its outreach exceeds other centralized exchanges. It can interact with other money robots and no one can interrupt it.

Without any further ado, we’ll be discussing actionable steps and procedures for making money on Uniswap.

Making Money on Uniswap

You can unleash your crypto assets to earn some passive income by providing liquidity to the Uniswap platform via couples of crypto assets like ETH and DAI. Leveraging the power of these crypto coins, Uniswap creates liquidity

You might be confused here why would someone use his crypto coins to contribute to the liquidity pools? Uniswap encourages crypto holders by providing them a value-added incentive. They share a minuscule proportion of their trading fees with the liquidity contributors.

Before participating in the liquidity pool, it is pertinent to know that providing assets to Uniswap is not like lending it for a markup.

Since you are the contributor to the liquidity pool, you have to take some risks and you can’t expect guaranteed returns.  Besides, a portion of your holding is always prone to lose.  Therefore, it is strongly recommended to fully grasp the risk involved in it before participating in the liquidity pool.

Never take a huge risk if you are not much familiar with Uniswap because it takes some time to fully understand the whole mechanism of it.

Gains of Uniswap

Each pool in Uniswap comprises a pair of assets. To become an active contributor to the liquidity pool and to capitalize on this protocol, you are necessitated to provide both sides of the pair.

To keep that in perspective, let’s take an analogy, let’s say we want to invest $100 in ETH/SAI pair. To do this, we need to provide $50 worth of ETH and $50 worth of DAI.

Your return for providing liquidity to the protocol escalates as the trading volume goes up. Uniswap charges a 0.3% fee from the traders. The amount of trading fees uniswap shares with you is proportional to the number of crypto funds you’ve added to the liquidity pool.

More trade means the chances of your profitability becomes maximum. Doesn’t it sound appealing to you as a crypto holder?

Conclusion

You can transform your crypto holdings into a value-generating asset by providing liquidity to the Uniswap, but selecting an appropriate pool and optimizing your returns are mandatory for earning profits on Uniswap.

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