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I have some professional backround in finance and still have literally no clue what "route liquidity for direct asset swapping" means. Can you ELI5 what uniswap

• DennisP 5y ago
  Uniswap is an exchange without an order book. A Uniswap pair has two assets in quantities X and Y, and a constant k such that X*Y=k. If you give some X to the contract, then it will give you back enough Y so that k is still constant. Effectively the ratio between the two assets' quantities is equal to their relative prices. By giving the contract both X and Y, you're providing liquidity. You get a new token Z, specific to that pair. Every exchange of X for Y (or vice versa) skims off a transaction fee, which is apportioned among holders of Z. (This actually describes the first version of Uniswap. The new version 3 has more complex math that lets you do fancier stuff, but is the same basic idea.)
  • nly 5y ago
    It seems that you can currently exchange $20M of USDC (Coinbase USD stablecoin) to Ethereum, or visa-versa, on Uniswap, with only ~3% slippage off the spot price. I'm not sure if this is impressive, but the US government must be glad that USDC is controlled by an American company (Coinbase) and an Irish one (Circle).