Uniswap has 3 versions:
- Launched as a proof of concept for Automated Market Makers (AMMs)
- Traders pay 0.3% of each trade to compensate liquidity providers (LPs)
- Tokens can be swapped only via ETH. No direct token exchange. For example, to swap DOGE ↔ SHIBA, need to do DOGE ↔ ETH, and then SHIBA ↔ ETH.
This version had a lot of new concepts:
- No more ETH bridge. Direct token swaps (DOGE ↔ SHIBA) are now possible. This cut the trading fee in half.
- Introduced the protocol fee: 0.05% of each trade goes to Uniswap for maintaining the service. (This is how Uniswap makes money). The fee is taken from LPs’ share — traders still pay only 0.3%.
- Added a price oracle — allows other contracts in the Ethereum ecosystem to estimate the price of one token relative to another.
Essentially the same functionality as v2 but on steroids.
- Improved price oracle that can now tell historic prices too (within the last 9 days).
- Multiple options for LP compensation — the idea is that higher risk pools will get more compensation.
- Fragmentation of
x*y=kcurve — this allows for more capital efficiency.
- Varying protocol fee that can be changed by the creators on a per-pool basis. (The fee is always between 10% to 25% of LP compensation).