How to Use Uniswap? A Simple Guide for Beginners

Key Takeaways

• Uniswap is a decentralized exchange (DEX) for swapping ERC-20 tokens on Ethereum and other EVM chains. A complete guide can be found in this blog.
• Testnet swaps allow beginners to practice without using real money, helping you get comfortable with the process.
• You can’t swap tokens between different chains on Uniswap. For interchain swaps you will need bridges.
• Always verify token contract addresses to avoid swapping into fake tokens and risking your funds.

What is Uniswap?

Uniswap is one of the largest Decentralised Exchanges by trading volume, where its users can buy and sell crypto on Ethereum and many other EVM chains. The action of buying and selling crypto on DEXs is called swapping. It essentially means, selling one cryptocurrency in return for another according to the prevailing market exchange rates. You can trade Ethereum for ERC-20 stablecoins such as USDC and USDT, or Ethereum for another ERC-20 token such as Avalanche on Ethereum or Arbitrum for Avalanche on the Arbitrum Chain.

We have already covered DEXs and Crypto Swapping in one of our previous blogs. However, in this blog we will show you how to use Uniswap as a beginner and understand different actions that can be performed. While doing so, we will also break down certain blockchain concepts into simpler terms.

Making your first swap on Uniswap (Testnet Demo)

Prerequisites

Make sure you have a crypto wallet installed as a desktop browser or as a mobile app such as Metamask on your mobile device with Ether or L2 tokens such as Avalanche, Polygon, Optimism or Arbitrum. If you do not understand crypto wallets and self-custody of digital assets completely we recommend you read our blog on crypto wallets. You may also want to refer to our tutorial on using crypto wallets to access DApps.

First Swap

Before trying out the swap with actual funds, let’s actually perform a swap with test funds on a test network on the Unsiwap app. 

• Get Test USDC on your wallet

  You can get ERC-20 USDC test funds into your metamask or similar wallet from the official circle usdc faucet. Copy paste your wallet address and request for testnet funds on the Ethereum Sepolia network. Uniswap supports the Ethereum Sepolia Network on its testnet.

  On clicking 10 USDC you should soon receive your funds.

  

  You will also need some test ether to pay for gas fees. You can receive some test ETH on Sepolia from this faucet.

  

  💡As an example When you swap ERC-20 USDC into ERC-20 Uniswap (UNI) token, the gas fee / transaction fee will still be paid in native Ether tokens.

• Connect your wallet to the Uniswap App

  On the top right corner click on the connect button, and connect your wallet to the Uniswap app.

  

• Select Testnet

  Click on your profile at the top, navigate to settings and switch on testnet mode as shown below

  

  You should now be able to see the 10 USDC balance. Observe that you have 10 USDC on the Ethereum Testnet network. Uniswap supports USDC on Avalanche, Arbitrum, Optimism etc. However you can only make a swap of a token on Ethereum into another token on Ethereum. You cannot swap directly between chains.

  For example you cannot swap Arbitrum on Ethereum into Avalanche on Polygon Chain. 

• Swap

  Now that you have test funds in your wallet, the final step is to make the swap. Navigate to the swap screen, select 10 USDC for sell and Wrapped ETH (WETH) for buy.

  We will basically swap our 10 USDC for Wrapped ETH (WETH). The amount of WETH that we will get in return for 10 USDC is calculated as per the current market rate by uniswap.

  

  Next click on Review and show more. You will be able to see advanced details of the swap.

  

  Now click on Approve and Swap.

  You will be asked to approve a set of instructions on your wallet, such as signing the message and confirming the swap. Once you complete all these steps you will see a confirmation notification.

  

  

Congratulations you have successfully completed your first swap on the testnet without risking any of your real funds! You can check the change in balances of USDC and WETH. You now have WETH in place of USDC. 

The experience of swapping in DEXs is starkly different from trading crypto in CEXs. This is fully decentralised and all the liquidity is powered by liquidity pools!

Mainnet Experience

Now that you have learnt how to swap crypto on the test network, you can try out swapping on uniswap with real funds. From a CEX such as Binance you can buy crypto and transfer it to your metamask wallet that you can then connect to Uniswap.

However, while swapping, always check the official contract address of the tokens you are swapping into if it's relatively new.

For eg. A new memecoin called abc.xyz might have launched and you would want to swap some of your Ether into it. Please ensure you verify the official contract address of the token from its official website or social media account before swapping. Every token has multiple fake versions that you might mistakenly swap into.

Summary

We hope you have now understood the basics of crypto swapping and how to use Uniswap. We recommend you also learn more about the advanced settings such as slippage and always ensure you check for price impact while swapping into tokens with lesser liquidity to minimise your losses.

FAQs

• What is Uniswap and how does it work?

  Uniswap is a decentralized exchange (DEX) that allows users to trade cryptocurrencies directly with one another. It operates on Ethereum and other EVM chains, enabling users to swap tokens like USDC, WETH, or other ERC-20 tokens without relying on a centralized exchange.

• How do I make my first swap on Uniswap?

  To make your first swap, you need a crypto wallet (like MetaMask) with some testnet funds. After setting up your wallet and connecting it to Uniswap, you can perform a test swap by selecting a token, such as USDC, and swapping it for another token like Wrapped ETH (WETH) on the Ethereum Testnet network.

• What is a testnet and why should I use it?

  A testnet is a blockchain network used to test transactions without using real money. Using a testnet allows beginners to practice swaps without risking actual funds. You can receive test USDC and Ether through a faucet and test the process safely.

• Can I swap tokens between different chains on Uniswap?

  No, you cannot swap tokens directly between different chains (e.g., swapping Arbitrum tokens for Avalanche tokens). You can only swap tokens that exist on the same chain, such as swapping USDC for WETH on the Ethereum network.

• What should I be cautious about when swapping with real funds on Uniswap?

  Always double-check the contract address of tokens you plan to swap, especially if the token is new. Fake versions of tokens can exist, and swapping into them can result in losing your funds. Ensure you verify the official contract address from trusted sources like the token’s website or social media.