Uniswap

Uniswap is the pioneering automated market maker (AMM) that revolutionized decentralized trading. Launched in November 2018 by Hayden Adams, it introduced the constant product formula (x*y=k) that became the industry standard for DEXs. Uniswap V2 added ERC-20 to ERC-20 swaps and flash swaps, while V3 introduced concentrated liquidity, allowing LPs to allocate capital within specific price ranges for dramatically improved efficiency. With over $5 billion in TVL and support across Ethereum, Polygon, Arbitrum, Optimism, Base, and BNB Chain, Uniswap processes more volume than any other DEX and remains the most widely used protocol in DeFi.

Uniswap uses an Automated Market Maker (AMM) model where liquidity providers deposit token pairs into pools. Instead of matching buyers with sellers, trades execute against these liquidity pools using a mathematical formula. In V2, the constant product formula (x*y=k) ensures the product of token reserves stays constant. V3 revolutionized this with concentrated liquidity—LPs can choose specific price ranges where their capital is active, dramatically improving capital efficiency (up to 4000x). When you swap, you pay a fee (0.05%, 0.30%, or 1%) that goes to liquidity providers. The protocol automatically rebalances pools as trades occur.