Uniswap is an exchange ethereum based protocol that enables crypto users to trustlessly swap ERC20 tokens using DeFi. It overcome the disadvantages of traditional order book model, Uniswap pools tokens are processed into smart contracts and users make a trade against these liquidity pools. Any Users in the exchange can swap tokens using uniswap, add also tokens to a pool to earn fees, or list a token on Uniswap.

Types of Smart Contracts in Uniswap:

It could be possible to make swap the tokens with two different types of contracts.

The type 1 is known as an Exchange contract. Exchange contracts hold a pool of a specific token and Ether that users can swap against.

The type 2 of contract is the Factory contract which is in charge of creating new Exchange contracts and registering the ERC20 token address to its Exchange contract address.

What is Liquidity Pools

Uniswap has unique in that it doesn't have an order book to show the price of an asset. In a centralized exchange, such as Coinbase Pro, the price of an asset listed on the exchange is determined by where the highest price someone is willing to pay and the lowest price someone is willing to sell meet.

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