[Practical Finance] Uniswap, the No.1 Decentralized Exchange... Accessible with Just a Personal Crypto Wallet

After Opening a Wallet, Link Your Account
Exchange Various Crypto Assets with 'Swap'
You Must Register Your Assets in the 'Liquidity Pool'

Decentralized Exchange (DEX) Uniswap homepage. / Photo by Uniswap homepage capture

[Asia Economy Reporter Myunghwan Lee] Following the bankruptcy filing of FTX, the world's third-largest cryptocurrency exchange, investor interest in decentralized exchanges (DEX) is growing. Unlike centralized exchanges (CEX) like FTX, DEXs enable direct transactions between individuals, freeing users from moral hazard issues associated with exchanges and cryptocurrency issuers.

Among them, Uniswap is the largest decentralized exchange boasting the highest trading volume. Uniswap operates based on the Ethereum network. According to CoinMarketCap, a global cryptocurrency market data site, as of the 13th, Uniswap's cryptocurrency trading volume reached $555 million (approximately 720 billion KRW). Together with the cryptocurrency research platform 'Zzangle,' we explore how to trade through Uniswap.

According to Zzangle, to use Uniswap, you first need a personal cryptocurrency wallet. A personal cryptocurrency wallet is an account that can store cryptocurrencies such as Ethereum. Each wallet is assigned a unique address that allows cryptocurrency transfers. The cryptocurrency wallet acts as a gateway connecting to the blockchain network.

There are various types of cryptocurrency wallets, but here we explain how to install 'MetaMask,' the most widely used wallet. MetaMask is an Ethereum-based cryptocurrency wallet developed as an extension for Google's Chrome web browser. Therefore, to create a MetaMask wallet account, you need a web browser that supports extension installation, such as Chrome, Edge, or Firefox. Of course, you can also create a wallet account using smartphone applications (apps) for Android or iOS.

Once MetaMask installation is complete, you can create a new wallet. After launching the program, press the 'Create Wallet' button and set a password for the wallet. After setting the password, a recovery phrase will appear, which must be carefully protected from leakage. If exposed externally, it can be exploited to steal the cryptocurrencies stored in the wallet. Since the recovery phrase is also used to recover the password if forgotten, it is advisable to write it down separately.

A screen running the virtual asset wallet service 'MetaMask'.

After creating the wallet, it is time to connect Uniswap with the wallet. Connecting Uniswap and the cryptocurrency wallet is simple. Access the Uniswap homepage, click the 'Launch App' button to enter the trading page. Then, click the 'Connect Wallet' button at the top right of the trading page, and through the MetaMask login window that appears, you can link your wallet account with Uniswap.

Once the wallet connection is complete, you are ready to trade the cryptocurrencies stored in your wallet. Decentralized trading on Uniswap can be done through 'Swap.' Swap is the concept of exchanging cryptocurrencies in an individual's wallet for other cryptocurrencies. Through Swap, you can exchange various cryptocurrencies one-to-one that are not supported by domestic exchanges.

This decentralized trading is conducted by depositing cryptocurrencies into a 'liquidity pool.' A liquidity pool refers to funds locked in blockchain-based smart contracts. If you deposit cryptocurrencies held in your wallet into the liquidity pool, traders can trade through Swap, and customers who deposited cryptocurrencies can earn profits in return.

To conduct decentralized trading on Uniswap, simply register your held cryptocurrencies in such a liquidity pool. Select 'Pool' from the top menu, then click 'New Position' on the screen that appears to access the menu where you can deposit cryptocurrencies. In this menu, select the cryptocurrencies you want to trade, set the quantity and price range, and deposit them. After depositing, you can check the accumulated profits of the deposited cryptocurrencies and adjust the supply amount from the 'Pool' menu.

However, it should be noted that trading cryptocurrencies through liquidity pools is not free. When depositing cryptocurrencies into the liquidity pool, a gas fee equivalent to centralized exchange fees is charged, so you should check the gas fee before trading.

This content was produced with the assistance of AI translation services.