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Fix docs #594
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@@ -4,7 +4,7 @@ title: Overview | |
sidebar_position: 1 | ||
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The `UniversalRouter` is an ETH, ERC20, and NFT swap router, that can aggregate trades across protocols to give users access highly-flexible and personalised transactions. The contract is unowned, and is not upgradeable. | ||
The `UniversalRouter` is an ETH, ERC20, and NFT swap router, that can aggregate trades across protocols to give users access highly-flexible and personalized transactions. The contract is unowned, and is not upgradeable. | ||
There was a problem hiding this comment. Choose a reason for hiding this commentThe reason will be displayed to describe this comment to others. Learn more. The spelling is correct |
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The flexible command style allows us to provide users with: | ||
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@@ -5,7 +5,7 @@ title: Ecosystem Participants | |
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The Uniswap ecosystem is primarily comprised of three types of users: liquidity providers, traders, and developers. Liquidity providers are incentivized to contribute [ERC-20](https://eips.ethereum.org/EIPS/eip-20) tokens to common liquidity pools. Traders can swap these tokens for one another for a fixed [0.30% fee](../advanced-topics/fees) (which goes to liquidity providers). Developers can integrate directly with Uniswap smart contracts to power new and exciting interactions with tokens, trading interfaces, retail experiences, and more. | ||
The Uniswap ecosystem is primarily comprised of three types of users: liquidity providers, traders, and developers. Liquidity providers are incentivize to contribute [ERC-20](https://eips.ethereum.org/EIPS/eip-20) tokens to common liquidity pools. Traders can swap these tokens for one another for a fixed [0.30% fee](../advanced-topics/fees) (which goes to liquidity providers). Developers can integrate directly with Uniswap smart contracts to power new and exciting interactions with tokens, trading interfaces, retail experiences, and more. | ||
There was a problem hiding this comment. Choose a reason for hiding this commentThe reason will be displayed to describe this comment to others. Learn more. The existing one looks correct as it is supposed to be "incentivized" and not "incentivize" |
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In total, interactions between these classes create a positive feedback loop, fueling digital economies by defining a common language through which tokens can be pooled, traded and used. | ||
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- Token projects sometimes choose to become LPs to create a liquid marketplace for their token. This allows tokens to be bought and sold more easily, and unlocks interoperability with other DeFi projects through Uniswap. | ||
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- Finally, some DeFi pioneers are exploring complex liquidity provision interactions like incentivized liquidity, liquidity as collateral, and other experimental strategies. Uniswap is the perfect protocol for projects to experiment with these kinds of ideas. | ||
- Finally, some DeFi pioneers are exploring complex liquidity provision interactions like incentivize liquidity, liquidity as collateral, and other experimental strategies. Uniswap is the perfect protocol for projects to experiment with these kinds of ideas. | ||
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# Traders | ||
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- Smart contracts that execute trades on the protocol by implementing swap functionality (from products like DEX aggregators to custom Solidity scripts). | ||
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In all cases, trades are subject to the same flat fee for trading on the protocol. Each is important for increasing the accuracy of prices and incentivizing liquidity. | ||
In all cases, trades are subject to the same flat fee for trading on the protocol. Each is important for increasing the accuracy of prices and incentivize liquidity. | ||
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# Developers/Projects | ||
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@@ -7,7 +7,7 @@ title: Pools | |
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# Introduction | ||
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Each Uniswap liquidity pool is a trading venue for a pair of ERC20 tokens. When a pool contract is created, its balances of each token are 0; in order for the pool to begin facilitating trades, someone must seed it with an initial deposit of each token. This first liquidity provider is the one who sets the initial price of the pool. They are incentivized to deposit an equal _value_ of both tokens into the pool. To see why, consider the case where the first liquidity provider deposits tokens at a ratio different from the current market rate. This immediately creates a profitable arbitrage opportunity, which is likely to be taken by an external party. | ||
Each Uniswap liquidity pool is a trading venue for a pair of ERC20 tokens. When a pool contract is created, its balances of each token are 0; in order for the pool to begin facilitating trades, someone must seed it with an initial deposit of each token. This first liquidity provider is the one who sets the initial price of the pool. They are incentivize to deposit an equal _value_ of both tokens into the pool. To see why, consider the case where the first liquidity provider deposits tokens at a ratio different from the current market rate. This immediately creates a profitable arbitrage opportunity, which is likely to be taken by an external party. | ||
There was a problem hiding this comment. Choose a reason for hiding this commentThe reason will be displayed to describe this comment to others. Learn more. The existing one looks correct as it is supposed to be "incentivized" and not "incentivize" |
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When other liquidity providers add to an existing pool, they must deposit pair tokens proportional to the current price. If they don’t, the liquidity they added is at risk of being arbitraged as well. If they believe the current price is not correct, they may arbitrage it to the level they desire, and add liquidity at that price. | ||
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@@ -34,7 +34,7 @@ Uniswap is unique in that it doesn’t use an order book to derive the price of | |
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Liquidity is typically represented by discrete orders placed by individuals onto a centrally operated order book. A participant looking to provide liquidity or make markets must actively manage their orders, continuously updating them in response to the activity of others in the marketplace. | ||
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While order books are foundational to finance and work great for certain usecases, they suffer from a few important limitations that are especially magnified when applied to a decentralized or blockchain-native setting. Order books require intermediary infrastructure to host the orderbook and match orders. This creates points of control and adds additional layers of complexity. They also require active participation and management from market makers who usually use sophisticated infrastructure and algorithms, limiting participation to advanced traders. Order books were invented in a world with relatively few assets being traded, so it is not surprising they aren't ideal for an ecosystem where anyone can create their own token, and those tokens usually have low liquidity. In sum, with the infrastructural trade-offs presented by a platform like Ethereum, order books are not the native architecture for implementing a liquidity protocol on a blockchain. | ||
While order books are foundational to finance and work great for certain use cases, they suffer from a few important limitations that are especially magnified when applied to a decentralized or blockchain-native setting. Order books require intermediary infrastructure to host the orderbook and match orders. This creates points of control and adds additional layers of complexity. They also require active participation and management from market makers who usually use sophisticated infrastructure and algorithms, limiting participation to advanced traders. Order books were invented in a world with relatively few assets being traded, so it is not surprising they aren't ideal for an ecosystem where anyone can create their own token, and those tokens usually have low liquidity. In sum, with the infrastructural trade-offs presented by a platform like Ethereum, order books are not the native architecture for implementing a liquidity protocol on a blockchain. | ||
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Uniswap focuses on the strengths of Ethereum to reimagine token swaps from first principles. | ||
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title: Understanding Returns | ||
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Uniswap incentivizes users to add liquidity to trading pools by rewarding providers with the fees generated when other users trade with those pools. Market making, in general, is a complex activity. There is a risk of losing money during large and sustained movement in the underlying asset price compared to simply holding an asset. | ||
Uniswap incentivize users to add liquidity to trading pools by rewarding providers with the fees generated when other users trade with those pools. Market making, in general, is a complex activity. There is a risk of losing money during large and sustained movement in the underlying asset price compared to simply holding an asset. | ||
There was a problem hiding this comment. Choose a reason for hiding this commentThe reason will be displayed to describe this comment to others. Learn more. The existing one looks correct as it is supposed to be "incentivized" and not "incentivize" |
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# Risks | ||
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@@ -25,7 +25,7 @@ Authors: Guillermo Angeris, Hsien-Tang Kao, Rei Chiang, Charlie Noyes, Tarun Chi | |
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Authors: Guillermo Angeris, Tarun Chitra | ||
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> Automated market makers, first popularized by Hanson's logarithmic market scoring rule (or LMSR) for prediction markets, have become important building blocks, called 'primitives,' for decentralized finance. A particularly useful primitive is the ability to measure the price of an asset, a problem often known as the pricing oracle problem. In this paper, we focus on the analysis of a very large class of automated market makers, called constant function market makers (or CFMMs) which includes existing popular market makers such as Uniswap, Balancer, and Curve, whose yearly transaction volume totals to billions of dollars. We give sufficient conditions such that, under fairly general assumptions, agents who interact with these constant function market makers are incentivized to correctly report the price of an asset and that they can do so in a computationally efficient way. We also derive several other useful properties that were previously not known. These include lower bounds on the total value of assets held by CFMMs and lower bounds guaranteeing that no agent can, by any set of trades, drain the reserves of assets held by a given CFMM. | ||
> Automated market makers, first popularized by Hanson's logarithmic market scoring rule (or LMSR) for prediction markets, have become important building blocks, called 'primitives,' for decentralized finance. A particularly useful primitive is the ability to measure the price of an asset, a problem often known as the pricing oracle problem. In this paper, we focus on the analysis of a very large class of automated market makers, called constant function market makers (or CFMMs) which includes existing popular market makers such as Uniswap, Balancer, and Curve, whose yearly transaction volume totals to billions of dollars. We give sufficient conditions such that, under fairly general assumptions, agents who interact with these constant function market makers are incentivize to correctly report the price of an asset and that they can do so in a computationally efficient way. We also derive several other useful properties that were previously not known. These include lower bounds on the total value of assets held by CFMMs and lower bounds guaranteeing that no agent can, by any set of trades, drain the reserves of assets held by a given CFMM. | ||
There was a problem hiding this comment. Choose a reason for hiding this commentThe reason will be displayed to describe this comment to others. Learn more. The existing one looks correct as it is supposed to be "incentivized" and not "incentivize" |
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- [Improved Price Oracles: Constant Function Market Makers](https://arxiv.org/abs/2003.10001) | ||
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id: liscense-modifications | ||
id: license-modifications | ||
title: License Modifications | ||
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The existing one looks correct as it is supposed to be "incentivized" and not "incentivize"