Uniswap allows for the automated, decentralized exchange of ERC-20 tokens. Their goal is to lower the barrier of entry to financial markets by making it easy to join the decentralized finance (DeFi) movement. The platform aims to allow anyone to create their own liquidity pools. Currently, there are over 400 active trading pairs and 6000 liquidity pools on Uniswap.

Although Uniswap is a popular component of the DeFi ecosystem, it is not without criticism or flaw. In July 2020, complaints began to emerge about “fake tokens” on the Uniswap exchange. Because anyone can list a token on Uniswap, and its decentralized nature means there is no review process, it is easy for scammers to create a token with a name similar to a popular DeFi platform, and trick users into purchasing worthless tokens.

There does not appear to be any data as to how much money has been lost to these scammers. However, several projects have had to make announcements warning users about fake tokens falsely claiming to be associated with the project.

In August 2020, Uniswap took steps to try to mitigate this issue via the introduction of Lists. A decentralized solution to a decentralized problem, these Lists aim to establish the legitimacy of tokens based on how many Lists they are included on, and how reputable those lists are. It remains to be seen whether scammers will find a way to exploit this system, but for now it appears to be a good attempt to address the issue while still maintaining the inherent decentralization of Uniswap, and still allowing legitimate projects to quickly and easily add their tokens.

In May 2021, the exchange upgraded to Uniswap V3. Designed to meet the needs of a growing DeFi economy, V3 introduced several new features to the platform. Concentrated liquidity is intended to reduce the amount of capital traders have to commit. New fee tiers give traders more control over risk level. And improved oracles provide more up-to-date price info.

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