Published in · 3 min read · Apr 3, 2022
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Uniswap and PancakeSwap are two of the most popular decentralized exchanges (DEXs) by trading volume. Although they function quite similarly, a few major differences set them apart. In this guide, we compare how these decentralized finance (DeFi) protocols work.
Uniswap launched in November 2018 as one of the first decentralized exchanges built on the Ethereum blockchain network. Since then, the protocol has undergone numerous upgrades. Uniswap allows crypto traders to trade ETH and ERC-20 tokens from a variety of wallets, including Metamask, Coinbase Wallet, and Fortmatic.
The Uniswap protocol works differently than a traditional exchange in that users don’t interact with order books. Instead, they trade available assets from liquidity pools that rely upon automated market maker (AMM) technology. Uniswap enables market makers (a.k.a. liquidity providers) to earn rewards in the form of cryptocurrencies by providing liquidity for the network to crypto traders — Uniswap’s market takers.
Uniswap’s biggest challenge thus far has been high transaction costs. The protocol relies upon the Ethereum blockchain for order settlements, which is expensive for end-users due to Ethereum’s limited scalability. As of this writing…
