Uniswap is the dominant decentralized exchange on Ethereum and its Layer 2s. Uniswap v3 (and v4, launched in 2024) uses concentrated liquidity — a fundamentally different model from the original AMM that makes capital significantly more efficient.
Swapping on Uniswap
- Go to app.uniswap.org
- Connect wallet (MetaMask, Coinbase Wallet, or any EVM wallet)
- Select the network (Ethereum mainnet, Base, Arbitrum, etc.)
- Choose the input and output token
- Set slippage tolerance (0.5% default; increase for low-liquidity tokens)
- Review the swap — check the rate, fee tier, and price impact
- Confirm in your wallet
Fee tiers on Uniswap v3/v4: 0.01%, 0.05%, 0.30%, 1.00%. Most major pairs (ETH/USDC) use 0.05%. Long-tail tokens typically use 0.30–1.00%.
Price impact warning: If price impact is >1%, the pool is thin. Split the trade into smaller orders or find a better-liquidity venue.
Understanding Concentrated Liquidity
In Uniswap v3+, liquidity providers choose a price range for their position. The capital only earns fees when the price is within that range. When price moves outside, the position becomes single-sided (fully in one token) and earns nothing.
Example: You provide ETH/USDC liquidity in the range $2,000–$4,000. If ETH is $3,000, your capital is active and earning fees. If ETH drops to $1,500, your position is now 100% USDC — you're fully in the "losing" asset and earning zero fees.
This makes Uniswap v3 positions require active management compared to the older v2 constant-product model.
Providing Liquidity
- Go to app.uniswap.org → Pool → New Position
- Select token pair and fee tier
- Set your price range (or use "Full Range" for a v2-style passive position)
- Enter deposit amounts — the ratio depends on where current price sits in your range
- Confirm — you receive an NFT representing your LP position (v3/v4)
Tips:
- Tighter range = more fees when in range, more risk of going out of range
- Full range = passive, always earns fees, but lowest capital efficiency
- Stablecoin pairs (USDC/USDT, USDC/DAI) with 0.01% fee tier are popular for low-risk yield
Fee Earnings
Fees go directly to LP positions — not auto-compounded. To collect:
- Go to Pool → Your Positions
- Click Collect Fees
On high-volume pairs, fees can be substantial. ETH/USDC in a tight range during active markets earns significant yield relative to capital deployed.
Uniswap v4 Hooks
v4 (launched 2024) introduced "hooks" — custom logic that runs before/after swaps and LP operations. This enables dynamic fees, on-chain limit orders, TWAMM (time-weighted AMM), and more complex strategies, all within a single pool contract.
For basic users, v4 looks identical to v3. The power is for developers building custom pool behavior.
Uniswap on Layer 2
For most DeFi activity, use Uniswap on Base or Arbitrum rather than mainnet:
- Fees: $0.01–0.05 per transaction vs. $2–20 on mainnet
- Same interface, same contracts
- Deep liquidity on major pairs
To get ETH/tokens on Base: bridge from mainnet or withdraw directly from Coinbase to Base.