High Gas Fees haunting Uniswap

Uniswap is a decentralized exchange, which has two smart contracts on the Ethereum platform, as well as a public, open-source front-end client. Uniswap lets users swap ERC20 tokens, including ETH, with other ERC20 tokens.

~Users can also contribute to liquidity pools of ERC20 tokens and earn commission from that.

~Uniswap trading fees have hit high-double digit figures as the Ethereum price spiked.

The growing popularity of DeFi has changed the crypto industry in many ways; yield farmers and traders are trying to maximize their profit making opportunities.

This, amongst other factors, has resulted in growing Ethereum Gas Fees, which is becoming problematic for users.

Functionalities

Uniswap, being decentralized, eliminates the need for third parties in transactions. It is 100% on-chain. It eliminates the need for third parties in transactions.

The technical details are as described by Sal Miah below:

“Swapping in Uniswap involves its two smart contracts in Ethereum; these are the factory and exchange contracts. The factory contract creates exchange contracts for ERC20 tokens without any preexisting contract. It also serves as a registry for all ERC20 tokens added into the system. Initiating the factory contact creates a unique exchange contract for each of the ERC20 tokens.

For the exchange to be successful, the platform requires a liquidity pool containing several types of ERC20 tokens. Users’ contribution to the liquidity pool creates a source of ERC20 tokens from which swapping is possible. Uniswap compensates its contributing members by giving the percentage of the transaction fee attracted by swapping. Each swap attracts a fee of 0.3%”.

Issues

As DeFis grew more popular in 2020, the impact of which is considerable, taking into account that Uniswap surpassed Coinbase Pro in trading volume. This is a milestone worth recognizing.

However, as the time went on, transactions became excessively expensive. It resulted in users spending almost $7 million in ETH to complete their trades.

Some market participants claim that “the increased popularity of “Dog meme coins” is what caused fees to go up the way that it did. SHIB and other Doge copycats like KISHU, SHIH, CoSHI, and ELON allegedly took up massive amounts of block space, causing large gas spikes”.

As Samyuktha Sriram writing for Benzinga magazine noticed, in one instance, a user paid $165 in fees to complete a $200 swap for AKITA on Uniswap.

Possible alternatives

Pancake swap

PancakeSwap is a decentralized exchange running on Binance Smart Chain, with lots of other features that let you earn and win tokens. The exchange is an automated market maker that allows two tokens to be exchanged on the Binance Smart Chain. On top of that, you can earn CAKE with yield farms, earn CAKE with Staking, and earn even more tokens with Syrup pools.

In terms of fees, “a swap on Pancakeswap only carries a 0.2% fee versus the 0.3% fee on Uniswap. The entire 0.3% fee on Uniswap goes to liquidity providers. Whereas only 0.17% of Pancakeswap 0.2% fee goes to LPs”.

Zero

Zero exchange is powered by the Avalanche blockchain. It offers near instantaneous transaction times and zero transaction fees. The only issue is that it is necessary to swap the ETH or supported stablecoin into the Avalanche version of that token first, a process that has to be conducted on the Ethereum network.

1inch

1inch is an exchange aggregator that scans different decentralized exchanges to find the best price. It also offers saving up to 42% on gas fees, through its CHI Gastoken innovation.

Anyswap

Some claim that Anyswap can be said to be the top Uniswap alternative in the DeFi space. The Anyswap protocol lets users swap more than just ETH and ERC-20 tokens, as it accommodates swaps of tokens across different blockchains.

“It can operate across several chains because it uses Fusion chain instead of ethereum like Uniswap. The fusion chain runs on the DCRM technology to bring about interoperability, which Anyswap uses for its protocol. In essence, the Anyswap can swap tokens that use EdDSA or ECDSA as its signature algorithm.

Users are able to swap between ETH, ERC-20 token, USDT, BTC, FSN, etc. This is a truly decentralized exchange as Anyswap has no control over your investments and funds”.

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