Listing your token on the Uniswap Exchange. What should you know?
Good morning to all DEX enthusiasts! Some may assume that we are currently in the middle of a bear market, and this could very well be true. However, projects are continually conducting token listings on both centralized and decentralized exchanges. In fact, according to The New York Times, there are over 100 cryptocurrencies launched each day. Some of these projects are highly experienced and know precisely how to launch a token, while others are newbies who may not know where to begin on their crypto journey.
Today, we will provide a comprehensive tutorial on how to prepare for and conduct a token listing on Uniswap. We will cover what you need to know, what criteria you should consider when selecting a crypto exchange, and how to obtain information about liquidity depth, starting token price, and other pertinent details.
You have questions, we have answers. Let’s dive deeper into the rabbit hole!
How does the Uniswap Exchange work?
What exactly Uniswap is?
Decentralized exchanges (DEX) have been a rising alternative to centralized exchanges in the cryptocurrency market. Unlike centralized exchanges, DEXs do not require intermediaries or custodians to facilitate trading. However, blockchain technology limitations have made it difficult for DEXes to compete with their centralized counterparts, until now.
Uniswap, an Ethereum-based decentralized exchange protocol, has revolutionized the industry with its automated liquidity protocol. Liquidity providers create liquidity pools where ERC-20 tokens can be swapped seamlessly without needing an order book. Uniswap charges no listing fees and can be considered a public good (however, setting up a pool costs up to $1000 in ETH if the gas is high)
Uniswap is a digital exchange that uses a Constant Product Market Maker design, a variation of the Automated Market Maker model. Liquidity providers fund these reserves, and the pool charges traders a fee, divided among liquidity providers according to their shares. Uniswap is currently the leading DEX by trading volume, and there are currently three versions, with V3 being the latest.
To swap one coin for another on Uniswap, head over to their official site and connect your crypto wallet, specifying the coins you wish to swap. However, transaction fees on Uniswap can be high, with the average gas cost being about $7.5 on the Ethereum network. Other popular crypto exchanges feature cheaper transaction fees.
Uniswap is running on liquidity pools
Liquidity pools are the base for the model of conducting transactions in the world of decentralized finance. It’s called AMM – automated market maker – which means the whole market-making process is now automated.
- “When a trader wants to conduct a sell transaction, she relies on the liquidity pool provided by the blockchain project and DeFi farmers.
- If the token A is sold, the amount of A is increased in the pool, and the amount of B is reduced (because the ultimate state of valuation is always 50% / 50% ratio)
- When token A is bought, there are fewer A tokens in the pool and more B (the ratio of the token amount is changed, but the value will stay at 50 % / 50%). “
We made an entire article on that!
How to list the token on Uniswap?
To list your DeFi token on Uniswap, there are a few steps you need to take care of. First, install MetaMask and deploy your ERC20 token contract to Ethereum mainnet.
Then, send your ERC20 tokens to your MetaMask wallet. Once you have completed these prerequisites, you can follow the steps below to list your DeFi token on Uniswap.
Step 1: Create an Exchange
To create an exchange for your token, you need to follow the steps below:
- Go to https://uniswap.exchange/ and connect with your MetaMask wallet.
- Select the “Pool” option on the upper right corner of the screen.
- Choose “Create Exchange” and press the “Select a Token” option.
- Enter your token’s address in the “Search Name or Address” field and select your token from the dropdown.
- Click on the “Create Exchange” option and confirm the pop-up that appears.
Step 2: Add Liquidity
Now that you have created an exchange for your tokens, it’s time to add liquidity. This means depositing both ETH and your own token. The price will be set according to how many tokens you deposit. To add liquidity, follow these steps:
- Click on the dropdown on the same page and press “Add Liquidity.”
- Input the amount of ETH you wish to deposit.
- Select the “Select a Token” option and enter your token’s address in the “Token Address” field.
- Press the “Unlock” option, enter the amount of your tokens you wish to deposit, and check the calculated exchange rate.
- Confirm your transaction by clicking “Add Liquidity” and the pop-up that appears.
Congratulations! You have now listed your token to the Uniswap exchange.
To swap your token for ETH, follow these steps:
- Go to the Uniswap exchange page and connect with your MetaMask wallet.
- Choose “Swap” and select the token you want to swap in the “From” field
How to set up a starting price?
Now, let’s discuss how to set the price when listing a token on Uniswap V3. It can be quite confusing to determine the price range, especially when the token is being listed on the DEX for the first time, without any transaction history. Newbie projects may not know whether to use V3 or V2 for setting the price range.
In reality, both options have their own advantages and disadvantages.
For low and mid-volume volatile pairs, it’s usually best to use Uniswap V2 and set a full range. For higher volume pairs, however, it may be more advantageous to concentrate the range by utilizing Uniswap V3. If you have limited capital, it’s generally less expensive to establish a price range using Uniswap V2 rather than Uniswap V3. This is because adjusting price ranges with Uniswap V3 can result in higher gas costs over time.
Sniping bot attacks during listing
When listing on Uniswap, token projects can become easy targets for sniping attacks in the process of setting up a pool. Sniper bots monitor the blockchain, looking for pool creation blocks, and try to enter between pool creation and the first liquidity mint, changing the initialization price. With the changed initialization price, they are able to buy part of the token treasury at a low price with the intention of dumping it shortly after. That leads to losses incurred by a token project or an initial liquidity provider.
The second consequence of a sniper attack is significant initial price volatility. It disrupts the natural price discovery process and records prices that do not accurately reflect the market’s perception of the token’s value, giving misleading signals to investors who may associate the token with a higher level of risk and instability.
At Empirica, we have developed a tool to mitigate the risk of a sniper attack during the pool creation process. Schedule a call with us to discuss this topic before listing your token.
Why is Uniswap good as a first exchange to list on?
Uniswap is a great first exchange to consider because it offers several advantages for investors over traditional crypto exchanges.
First, you can trade anonymously, which means you don’t have to reveal your identity. You can also trade directly from your wallet, and the only identifier required is your public wallet address.
In terms of general security, Uniswap is very reliable. The protocol is non-custodial, which means it doesn’t hold any funds, and its smart contracts have been audited by several teams. This makes it more secure than other exchanges that hold your funds. Since there are no intermediaries involved, all trades take place directly from your wallet, which makes you responsible for your tokens and private keys. This means you have complete control over your funds and can trade without any third-party involvement.
Uniswap also offers instant access to new tokens, allowing you to create ERC20 tokens and pair them with ETH to produce liquidity for new pools.
How to choose the best DEX exchange?
If you’re new to the world of decentralized exchanges (DEXs), choosing the right one to list on can be overwhelming. But don’t worry, I’m here to help.
Firstly, you’ll want to check out the fees. Nobody likes paying fees, so it’s important to find a DEX that offers transparent information about its fees. Avoid any platforms that don’t provide clear information.
Next up is security. While your funds aren’t held by the exchange, you want to make sure the DEX you choose takes security seriously. Look for a platform that uses the latest and most reliable security software.
Make sure the DEX supports the coins you want to trade. If you’re interested in exploring new assets, choose a platform with a broad range of cryptocurrencies. But if you prefer to stick with the tried and tested assets, any of the top five exchanges should suffice.
Consider the payment methods supported by the DEX. It’s important to be able to buy crypto using a convenient payment method, especially if you’re new to the game. So, look for a DEX that supports your preferred payment method.
Don’t overlook customer service. Having someone helpful and responsive on the other end of the line can make all the difference when things go wrong.
Finally, read customer reviews. Search for “best decentralized exchange Reddit” to find discussions among crypto enthusiasts who have tried and tested various exchanges and chosen the best one for their needs.
By paying attention to these key factors, you can make an informed decision and avoid any unwanted surprises.
How does Empirica Help Its Clients?
Today’s listing requires a comprehensive approach, and our services include extensive support in this area. We are a liquidity provider that specializes in DEXes. We have significantly invested in tools supporting safe listing on Uniswap exchange, automating range adjustments and implementing effective position hedging. By doing so, we support listing and liquidity with minimal slippage, requiring relatively less capital and, notably, without charging you fees for our service. All we need is a loan in your tokens, which Empirica utilizes entirely to provide liquidity to your investors.
Active management of concentrated liquidity
While many tokens try to provide liquidity to their pools, it often results in inefficient capital usage or considerable losses. We support tokens by providing continuous liquidity provision maintaining a minimal slippage and ensuring uninterrupted trading opportunities for investors.
Piotr explains how we work. Learn what is the difference between passive and active management of concentrated liquidity on DEX platforms based on examples from Uniswap V3. Piotr demonstrates how we manage token liquidity with efficient use of capital achieving the same results with less burden on token project’s treasury.
Enjoy the video!
Algorithmic market-making process
One of the most challenging aspects of listing your token on multiple exchanges is maintaining a consistent price across all platforms. If the price varies significantly, arbitrage opportunities can arise, which could lead to a decline in your token’s value and harm your community and brand reputation. To prevent this, we can implement algorithmic mechanisms that keep the price stable across all exchanges, ensuring that you maintain the trust of your investors.
Designing and implementing hedging strategies
In DeFi, there is a risk known as impermanent loss, which occurs when the price of deposited assets changes from the time they were deposited. When you invest a large sum of money in a liquidity pool, you are exposed to potential financial loss. However, with proper hedging strategies, it’s possible to minimize the risk of impermanent loss and reduce the likelihood of losing money on liquidity pools.
Advising on pool size
Liquidity pools are an essential part of DeFi, enabling efficient and decentralized trading without requiring centralized intermediaries. Properly designing the liquidity pool value is crucial to a successful launch, as it determines the amount of deep liquidity you’ll need. Without liquidity pools, DeFi would struggle to achieve the liquidity necessary for a thriving ecosystem. To avoid stress during the listing, we can provide guidance on the optimal size for your pools.
Risks mitigation
Sniping attacks can exploit weaknesses in the token listing process. The prevalence of sniper bots can discourage retail traders from participating in token listings. Knowing that bots have an advantage in quickly acquiring new tokens may lead to a perception of an unfair and less inclusive market. We have have developed tools and solutions to protects our partners against these attacks.
Insights from our example projects
Token listing that we supported simultaneously on three exchanges as the sole market maker
One of our clients is a mature token project with a global recognition listed on over 30 markets with significant trading volumes. It has a large and active community. The price increased up to 250% within the first week after listing, and remains stable after the first month. Since the listing, volumes have begun to rise significantly, reflecting a healthy market and good trading conditions (see the Price and Volume chart below).
Ensuring liquidity and stabilizing price on Uniswap V3
When we started our cooperation, the token had a pool on Uniswap v3 with almost no volumes there. Prior to our entry into this market, price volatility reached 165% and there was almost no depth! The stabilization of prices (with a maximum volatility of 9%) was reflected in an increase in volume. Our role was not only to drive the expansion on DEXes but also increase liquidity on a few chosen centralized exchanges.
Bottom Line
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See you in the next article!
