On October 16, Uniswap founder Hayden Adams tweeted that the decentralised exchange (DEX) is introducing a 0.15% swap fee on certain tokens in its web app and wallet starting October 17. This news led to misunderstanding and FUD within the crypto community.
By the way, back on October 14, media and X (formerly Twitter) users were attracted by the information about the Uniswap’s introduction of Know Your Client (KYC) procedure in the forthcoming 4th version of the protocol. Find out more about this in our article: KYC on Uniswap v4: FUD or truth.
Uniswap 0.15% fee introduction
On October 17, Uniswap got to the centre of attention. The DEX has introduced a 0.15% fee for swaps in several trading pairs. You can check the size of the fee in dollars in the detail section while swapping tokens via the Uniswap web app.
There are three important details from the official announcement to keep in mind:
1️⃣ Only ETH, USDC, WETH, USDT, DAI, WBTC, AGEUR, GUSD, LUSD, EUROC, and XSGD tokens are subject to this fee (across all blockchains available on Uniswap);
2️⃣ Only swaps with a pair of both tokens from this list are subject to these fees (e.g., for the ETH/SHIB swap, there will be no fees, while for the ETH/USDT one, there will);
3️⃣ Swaps for pairs of stablecoins are not subject to fees (e.g., USDT/USDC will be free).
A bit about how DEXs work
This news led to disappointment within the community. However, there is a silver lining. To understand it, we need to dive into the structure of decentralised exchanges in general.
Uniswap is one of the oldest and largest DEXs. Trading through Uniswap takes place on specially configured smart contracts called pools. These pools store pairs of tokens that users can trade and make a "swap".
In detail, a swap happens as follows:
🙋 You have 500 USDT and want to swap it for ETH;
💰 ETH/USDT pool is present on Uniswap;
🤝 By connecting your wallet through the Uniswap interface, you can make this swap at the current pool rate, which may differ from the official exchange rate as it depends on the tokens’ ratio in this particular pool.
What’s the catch with Uniswap fees
The strength of DeFi lies in its ability to allow anyone with proper skills to make their own interface for interacting with smart contracts running on blockchains. This could be another site or app enabling you to facilitate exchanges within Uniswap pools, not through their native interface. In such a case, you will not be charged with the 0.15% fee.
However, this approach comes with risks. Third-party interfaces may have vulnerabilities or could belong to malicious people, potentially resulting in financial losses. In this regard, it is better to use only official apps and sites.
To achieve widespread adoption among ordinary users, we need a frontend — a website or a smartphone app, which empowers us to perform what we need without external knowledge. Basically, for maintaining such apps and websites Uniswap needs money. As a result, the new 0.15% fee is imposed only when utilising the Uniswap DEX through its official interface.
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