Difference between revisions of "Uniswap"

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(Created page with "Aave is a decentralized protocol where users can borrow tokens by depositing more collateral than what is being borrowed [https://docs.aave.com/portal/] == Governance == Aave Governance consists of the proposition and decision-making process for the different risk parameter changes, improvements and incentives that constitute the policies, and upgrades to governance itself. [https://docs.aave.com/aavenomics/governance] == Staking == Aave will be secured by a Safety Mod...")
 
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Aave is a decentralized protocol where users can borrow tokens by depositing more collateral than what is being borrowed [https://docs.aave.com/portal/]
The Uniswap protocol is a Permissionless peer-to-peer system designed for exchanging cryptocurrencies ([https://ethereum.org/en/developers/docs/standards/tokens/erc-20/ ERC-20 Tokens])


== Governance ==
== AMM ==
Aave Governance consists of the proposition and decision-making process for the different risk parameter changes, improvements and incentives that constitute the policies, and upgrades to governance itself. [https://docs.aave.com/aavenomics/governance]
Uniswap uses an Automated Market Maker(AMM) model. An AMM replaces the buy and sell orders in an order book market with a liquidity pool of two assets, both valued relative to each other. As one asset is traded for the other, the relative price of the two assets shifts, and a new market rate(price) for both is determined <ref>https://docs.uniswap.org/protocol/introduction#order-book-vs-amm</ref>


== Staking ==
== Liquidity Provider ==
Aave will be secured by a Safety Module (SM), a staking mechanism for AAVE tokens to act as insurance against Shortfall Events. Stakers earn AAVE as Safety Incentives (SI) along with a percentage of protocol fees. [https://docs.aave.com/aavenomics/flashpaper#aave-staking]
A liquidity provider is someone who deposits ERC20 tokens into a given liquidity pool. Liquidity providers take on price risk and are compensated with trading fees. <ref>https://docs.uniswap.org/protocol/concepts/V3-overview/glossary#liquidity-provider--lp</ref>


== AAVE V1 ==
== Swaps ==
This project was launched in November 2017 as a P2P lending platform called ETHLend and later renamed Aave in September 2018.
Swaps are the most common way of interacting with the Uniswap protocol. For end-users, swapping is straightforward: a user selects an ERC-20 token that they own and a token they would like to trade it for. Executing a swap sells the currently owned tokens for the proportional amount of the tokens desired, minus the swap fee, which is awarded to liquidity providers <ref>https://docs.uniswap.org/protocol/concepts/V3-overview/swaps#introduction</ref>


== Slippage ==
When transactions are submitted to Ethereum, their order of execution is established by the amount of "gas" offered as a fee for executing each transaction. The higher the fee offered, the faster the transaction is executed. The transactions with a lower gas fee will remain pending for an indeterminate amount of time. During this time, the price environment in which the transaction will eventually be executed will change, as other swaps will be taking place. <ref>https://docs.uniswap.org/protocol/concepts/V3-overview/swaps#slippage</ref>


== Governance ==
Uniswaps organizational norms, code and future updates are determined by voting on proposals


The platform was created to allow lending in a decentralized manner between two users. Therefore, a peer-to-peer (P2P) model was used that allowed the exchange of information and money directly between users.
To start voting in Uniswap Governance users will need:


This p2p model, however, proved to be inefficient because there was a need to have demand rather than supply. It was then passed to a peer-to-contract (P2C) model, in which the funds were deposited within a special contract that allowed users to use them instantaneously by paying the “lender” an interest fee. [https://medium.com/coinmonks/introduction-guide-to-aave-v1-945175125486]
* [https://uniswap.org/blog/uni UNI Tokens]  
* ETH for transaction costs
* A browser with Metamask installed


The relationship between the pool’s liquidity and the demand to borrow will determine the interest rates. So, when the demand for borrowing increases, it reduces available liquidity, interest rates rise, and depositors generate more income.
The governance process begins in the Governance Forum, where you can find proposals under consideration, gather information about community sentiment, and engage with the community. <ref>https://docs.uniswap.org/protocol/concepts/governance/guide-to-voting</ref>
 
== AAVE V2 ==
In AAVE V1 assets that were being used as collateral were tied up, but now with V2 they are free to be traded. Users can trade their deposited assets, across all currencies supported in the Aave Protocol, even when they are being used as collateral. [https://medium.com/aave/the-aave-protocol-v2-f06f299cee04]
 
== AAVE V3 ==
V3 is mostly about two things: risk awareness/mitigation, and capital efficiency
 
 
 
As a result, V3 introduces “isolated markets” – this allows Aave governance to list assets as collateral faster, but only as a single source of collateral, and not as a bundle. Additionally, isolated markets will have supply caps controlled by the DAO governance and as that asset matures they can increase the ceilings until eventually turning off the isolation model or the particular asset. So it kind of allows asset scalability
 
V3 will also include “high efficiency mode.” This feature will allow users to leverage extremely high loan-to-value ratios so long as they take loans in the same asset that they deposit as collateral – in some instances, even up to 98% LTV. The main idea here is that once we have different kinds of stablecoins – euro stablecoins, pound stablecoins – then you can essentially have FX trading on-chain [https://www.coindesk.com/tech/2022/03/16/defi-platform-aave-lauches-v3-with-cross-chain-swaps-front-and-center/]


== Sources ==
== Sources ==
# https://docs.aave.com/portal/
# https://docs.aave.com/aavenomics/governance
# https://docs.aave.com/aavenomics/flashpaper#aave-staking
# https://medium.com/coinmonks/introduction-guide-to-aave-v1-945175125486
# https://medium.com/aave/the-aave-protocol-v2-f06f299cee04
# https://www.coindesk.com/tech/2022/03/16/defi-platform-aave-lauches-v3-with-cross-chain-swaps-front-and-center/

Revision as of 14:30, 19 April 2022

The Uniswap protocol is a Permissionless peer-to-peer system designed for exchanging cryptocurrencies (ERC-20 Tokens)

AMM

Uniswap uses an Automated Market Maker(AMM) model. An AMM replaces the buy and sell orders in an order book market with a liquidity pool of two assets, both valued relative to each other. As one asset is traded for the other, the relative price of the two assets shifts, and a new market rate(price) for both is determined [1]

Liquidity Provider

A liquidity provider is someone who deposits ERC20 tokens into a given liquidity pool. Liquidity providers take on price risk and are compensated with trading fees. [2]

Swaps

Swaps are the most common way of interacting with the Uniswap protocol. For end-users, swapping is straightforward: a user selects an ERC-20 token that they own and a token they would like to trade it for. Executing a swap sells the currently owned tokens for the proportional amount of the tokens desired, minus the swap fee, which is awarded to liquidity providers [3]

Slippage

When transactions are submitted to Ethereum, their order of execution is established by the amount of "gas" offered as a fee for executing each transaction. The higher the fee offered, the faster the transaction is executed. The transactions with a lower gas fee will remain pending for an indeterminate amount of time. During this time, the price environment in which the transaction will eventually be executed will change, as other swaps will be taking place. [4]

Governance

Uniswaps organizational norms, code and future updates are determined by voting on proposals

To start voting in Uniswap Governance users will need:

  • UNI Tokens
  • ETH for transaction costs
  • A browser with Metamask installed

The governance process begins in the Governance Forum, where you can find proposals under consideration, gather information about community sentiment, and engage with the community. [5]

Sources

  1. ↑ https://docs.uniswap.org/protocol/introduction#order-book-vs-amm
  2. ↑ https://docs.uniswap.org/protocol/concepts/V3-overview/glossary#liquidity-provider--lp
  3. ↑ https://docs.uniswap.org/protocol/concepts/V3-overview/swaps#introduction
  4. ↑ https://docs.uniswap.org/protocol/concepts/V3-overview/swaps#slippage
  5. ↑ https://docs.uniswap.org/protocol/concepts/governance/guide-to-voting
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