How to Start

Introduction

Uniswap v3 is a popular decentralized blockchain protocol that initially emerged on the Ethereum blockchain. As of today, it can also be used on the Polygon, Arbitrum, Optimism, or Celo blockchains. This article will explain how to get on Uniswap, what you need to do, where you can swap assets on the Uniswap platform, how to create a liquidity pool (LP), and so on.

Let's get started!

How to start?

In order to use the Uniswap v3 protocol, you need enough digital assets in your MetaMask wallet on one of the blockchains supported by the protocol:

  • Ethereum (ETH) – fees are paid in the $ETH
  • Polygon (MATIC) – fees are paid in the $MATIC
  • Arbitrum – fees are paid in the $ETH
  • Optimism (OP) – fees are paid in the $ETH
  • Celo (CELO) – fees are paid in the $CELO

For example, you may send the above assets to your wallet from centralized exchange (CEX). You may choose ethereum, arbitrum, or optimism if you are sending on the Ethereum blockchain. If you send $MATIC, you will choose Polygon, if you send celo, you will choose the Celo blockchain. Generally, the easiest way to accomplish this is by sending sufficient cryptocurrency on that blockchain for fees, and then swapping some of it via the Uniswap protocol to perform other necessary operations, such as liquidity pool (LP) composition. Ensure that you have enough left over after the swap to pay any necessary fees in the appropriate cryptocurrency. Once you have your digital assets on one of the above blockchains, you can exchange them for other cryptocurrencies or bridge between blockchains using cryptocurrency bridges.

The cheapest option is to use a blockchain such as Polygon, Arbitrum, Optimism or Celo, which charges transaction fees in cents. Even Ethereum is no longer as expensive as it used to be, but keep in mind that when you use the Ethereum blockchain to utilize Uniswap, every transaction that you complete (swap, bridge, LP creation, etc.) will cost you 2 – 10 USD.

If you do not know how to get digital assets into a MetaMask wallet, add a network, or bridge between blockchains, take a look at our DeFi guide. You will learn the whole process.

Supported Wallets

MetaMask / Coinbase Wallet / WalletConnect

Contracts

$UNI 0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984

$ETH: 0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2

$USDC: 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48

$USDT: 0xdAC17F958D2ee523a2206206994597C13D831ec7

$DAI: 0x6B175474E89094C44Da98b954EedeAC495271d0F

If you need to find an address of another asset, use the following link.

Here is a detailed tutorial on how to add a crypto asset using a contract to your Web 3.0 wallet: Add Tokens into the MM.

Platform Functions

Swap – in this section, you swap assets among all of them, either as a means of trading or to create LP

Tokens – listing the daily movement and charts of the top tokens on Uniswap, sorted by TVL

NFTs – there is a new feature on Uniswap v3 that allows users to purchase and sell NFTs on a variety of marketplaces. In this section, you will find information about NFT lists, changes in floor prices, changes in volume, total NFT counts, and owners of NFT.

Pool – here, you will be able to view your active LP and create new ones using the ‘+ New Position’ button

Where to Put Tokens

We are now ready to make our first LP. An LP is always composed of two different cryptocurrencies in a 50:50 ratio. By providing liquidity, we will be rewarded by the protocol, which varies across different protocols. Here, our rewards from the Uniswap protocol are derived from swapping fees.

You can create an LP by clicking on the ‘Pool’ button and then clicking ‘+ New Position’. There will be a table similar to the one shown in the screenshot below, where you can select the token pairing. If you are creating an LP for the first time, you'll have to click on the blue ‘Approve' button, then select ‘Preview' where you can create an LP using the 'Add' button.

LP has the option of four fee tiers: 0.01 %, 0.05 %, 0.3 %, and 1 %. Fee tiers determine the value of your rewards and the range of provided liquidity. More information about how to decide between them can be found in the articles Uniswap v3 - Opportunities & Risks and Uniswap v3 - Protocol.

Uniswap

It is necessary to click on ‘Swap’ in order to swap assets. Following this, you will be presented with a menu from which you can select the asset that you wish to swap from and to.

Uniswap

If you are unable to locate the desired ERC-20 token in the list, search for it here and enter its contract address into the ‘Search’ line (see image).

Uniswap

Sources

Analyst Opinion

We have briefly described how to work with the Uniswap v3 platform. Remember that investing in or providing liquidity (LP) in decentralized finance (DeFi) always comes with many risks, such as impermanent loss (IL). It is important to choose the right assets for your LP and not just chase high returns, which may eventually result in a loss. In order to inspire you, we have prepared a continuation of this article on strategies for – Uniswap v3 - Opportunities & Risks.

René Užovič