The Uniswap protocol is a decentralized exchange that allows users to easily exchange ERC-20 tokens on the Ethereum blockchain. Uniswap offers many advantages over traditional centralized exchanges and does not require KYC verification, trading fees are a low .3% and users can swap tokens directly from their MetaMask wallet. In this article, I will show you how to easily trade Basic Attention Token for USDC by using the decentralized Uniswap cryptocurrency exchange protocol.

The first step in the process is to go to uniswap.io and click on the "Swap Tokens" icon.

The next step is to connect your MetaMask wallet by logging in and clicking connect.

Before you can place your first trade, you must "unlock" the asset that you want to trade. This is just a very small ETH transaction (less than a few cents) that must be sent to initialize the contract. Those of you who have used any kind of DeFi application such as Compound will already be familiar with this step.

Next, we must select the input and output cryptos. Uniswap has a lot of great features, but one feature that I like the most is that users can trade directly between any of the currencies that the site supports. For example, If I was using CoinbasePro to trade BAT for DAI, I would first have to convert BAT to USDC or ETH and then convert that ETH or USDC to DAI. Uniswap removes this extra step and allows users the freedom to directly exchange between any of the supported assets. You simply have to select the input asset that you want to get rid of and the output asset that you want to receive.

After you have selected the input and output currencies and verified the slippage limits, click swap. The transaction will begin to process, and the time taken to complete the transaction will depend on the amount of ETH gas that you specified. Once the transaction has completed, you will see that the input asset has been taken from your MetaMask and the output asset has been deposited in your MetaMask. That's it! Another great thing about Uniswap is that the funds come straight to your MetaMask. You don't have to copy and paste your public key into the website.

Note About Slippage

Before placing your trade, it is also a good idea to take a look at the estimated slippage. Slippage is the difference between the quoted price for a trade and the actual price of the trade. Let's suppose I place a market order to sell 100 DAI with a quoted return of 99.95 USDC. Due to slippage, I might only receive 99.90 DAI. Slippage can occur for a variety of reasons related to the market, and is inherent in any kind of market based trading orders. Thankfully, Uniswap gives users the ability to limit slippage to a certain percentage of the transaction.

Let's use the DAI example again. The quote says that I will receive 99.95 USDC for my 100 DAI, and I accept that the market can fluctuate and that I might get a little bit less DAI. By clicking the .5% slippage, I am telling Uniswap that I only want the transaction to be approved if the difference between the quoted and actual prices are less than .5%. Clicking the 1% slippage option allows Uniswap to execute the trade as long as the price difference is less than 1%. There is a bit of a balancing act here. Higher slippage percentages make it more likely that the order will be traded while lower slippage selections allow the trader to have more control over how much crypto they receive for their trade. Either way, Uniswap is one of the first platforms that I have used which allows users to select the level of slippage that they will accept.

Conclusion

Uniswap is the first decentralized exchange that I have used, and I have to say that I am impressed. It was easy to trade my crypto, and I got a fair trade value. The fees were low, and I liked that the platform allowed me to set a maximum limit for the slippage that I was willing to accept. Keep in mind that this platform is still in beta and the website says to "use at your own risk." I am not an expert programmer, and I can't look at the source code line by line to determine how secure the platform is, but it did work for me. I think that Uniswap is certainly worth considering if you are looking for a fast, easy, decentralized way to swap ERC-20 tokens.

Thumbnail adapted from: https://uniswap.io/