Keep these points in mind about AMMs (automated market makers):
1) Uniswap V2 charges a 0.3% fee on every trade. Historically, all of it went to LPs; after governance enables protocol fees, the protocol takes 0.05% from Ethereum mainnet V2 pools, and LPs receive 0.25%.
2) AMMs don’t require people placing orders to match trades one by one. Traders swap one token for another in a liquidity pool.
3) For tokens with shallow liquidity pools, check the displayed slippage before making a large one-off buy or sell, and split it into several trades if needed.
$UNI is the governance token of Uniswap, which popularized AMMs.
1) Uniswap V2 charges a 0.3% fee on every trade. Historically, all of it went to LPs; after governance enables protocol fees, the protocol takes 0.05% from Ethereum mainnet V2 pools, and LPs receive 0.25%.
2) AMMs don’t require people placing orders to match trades one by one. Traders swap one token for another in a liquidity pool.
3) For tokens with shallow liquidity pools, check the displayed slippage before making a large one-off buy or sell, and split it into several trades if needed.
$UNI is the governance token of Uniswap, which popularized AMMs.