The decentralized finance sector provides amazing tools for traders to make profits within the market. This is made possible by the massive amounts of crypto services that are available in the sector. The sector works in a clear and dynamic way because these services and products are provided to users without the need for an intermediary. One of the many protocols that provide these services is Uniswap. One of the aims behind setting up Uniswap is eliminating third-party apps, hacking and excessive fees. In this article, we will be looking at Uniswap and how to stake tokens on the platform.
What is Uniswap?
Uniswap is a decentralized exchange developed on Ethereum, whose main focus is helping traders swap tokens based on the Ethereum blockchain. The exchange is known for its fast speed and efficient trading. This is made possible through the elimination of third-party financial institutions. Instead of matching sellers and buyers, who determine the price of assets and make trades, Uniswap does this through a math equation and a token pool.
How does it work?
Unlike most traditional decentralized exchanges, Uniswap does not run on any order book. Instead, it uses Constant Product Market Marker to carry out its activities. CPMM is a subtype of the usual Automated Market Maker used in the DeFi market. The AMM works in a way that trades can carry out trades against assets in the liquidity pools. However, traders also fund the liquidity pools by adding tokens to the pools. To become a liquidity provider on Uniswap, a trader must deposit the same amount of two tokens into the pools. When traders carry out trades, they pay fees which are then passed on to other traders who provide liquidity on the platform.
How to stake on Uniswap
Staking on Uniswap is pretty straightforward, unlike other decentralized exchanges requiring you to do some technical stuff.
The first step in staking your tokens on Uniswap is to get an Ethereum supported wallet. This is important because Uniswap is built on Ethereum, and most of its activities will require a wallet that supports Ethereum. For the sake of this tutorial, we will be using MetaMask.
In the second step, you will need to buy some Ethereum and send them into your MetaMask wallet. The Ethereum you will buy will be used to offset gas fees when you are about to stake the token of your choice. With all this done, the next step requires you to send the total amount of token you wish to stake into your MetaMask wallet.
In the next step, you will need to enter the staking portal on the Uniswap page. After you gain access, you will be required to connect your wallet to the portal. However, you should note the kind of permissions you will allow when accessing sites with your wallets. You can then go ahead and stake any amount of your token that you wish to, paying your gas fees in Ethereum.
Staking is one of the easiest forms of making profits in the decentralized finance sector. Users can earn a predefined reward for any amount of token they stake on their respective platforms. Traders can also stake tokens on Uniswap through other websites. However, traders need to be vigilant if they are to carry out any activity in the sector. This is because fraudsters and hackers are always on the prowl, and they might fall into the wrong website if they are not well informed. This is why it is mandatory to research before doing anything.
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