Uniswap is a significant DeFi in the crypto ecosystem that includes 3 types of users like the traders, liquidity providers, and the developers. Overall, the interaction between these three communities will fuel the digital economy and create positive feedback for the pooled money. In July 2020, this DEX protocol hit an all-time high by adding 58,000 more users that show a growth of 132%.
This protocol has introduced the new version, Uniswap 2. It offers features like flash swaps, ERC-20 pairs, and ‘manipulation resistant price’ Oracles. Moreover, this open-source protocol runs on the Ethereum network. Moreover, its trading fee is just 0.30% for every token swap. This fee is provided to the liquidity providers. If you want to make money through ‘yield farming’ on Uniswap, you need to be a liquidity provider. Here, the liquidity provider gets the collected fees that are added back to the liquidity pool.
How To Do Yield Farming On Uniswap?
As the Ethereum network is used for Uniswap, traders need to provide 0.30% of fee and gas to the liquidity providers. However, if you are trading as a liquidity provider, there is more scope to make more money. Let’s see a few ways on how you can make money through Uniswap:
- Adding The Liquidity: You can add liquidity to the Uniswap pool by adding new tokens and earning the same fees. If you add the tokens like 2KEY and DAI, you will earn the fee for every trade done in the liquidity pool. If your liquidity share is 30%, you are eligible to get the collected fee of 30% from this DEX platform pool.
- Track Your Collected Fees: You can track your fee earned after adding to the liquidity pool by visiting the uniswaproi.com and creating an account. This site will state your Uniswap investments in one place. Here, after filling your details and entering the Analyze ROI, you can see your liquidity position in the form of the summary table.
- Go For Cash Out: After tracking your collected fee, if you think you have made enough cash or want to withdraw your profits and then cash out from your Uniswap account. The liquidity providers must use their ‘web3 wallet’ to deposit the liquidity. It will help in detecting your pool on the Uniswap site. Here, you will see your account details. Now, you can add or remove the liquidity on your will. Click on ‘remove’ and confirm your liquidity to your web3 wallet.
Uniswap works with the Ethereum network, and along with ERC-20, you can add new tokens too. This decentralized exchange helps you earn a good percentage and collected fee if you are a liquidity provider, as only traders need to pay the fee. The great thing about the Uniswap platform is that the transactions are executed through the Smart Contract. It helps the liquidity pool providers get the full control of their money present in their Uniswap account. Uniswap is rapidly becoming the choicest DeFi platform that renders automated liquidity for different applications present on the Ethereum Blockchain.