How to connect your Coinbase wallet with Uniswap5 min read

The on the rise decentralized financial ecosystem (Defi) uses decentralized financial products without care to replace centralized intermediaries in financial applications such as derivatives, insurance, and loans.

Uniswap is a good example of one of the main products in the DeFi ecosystem, Decentralized Exchange Encryption (DEX). DEXs aim to solve the problems of their centralized counterparts, including the risk of mismanagement, hacking, and high-handed fees. However, decentralized exchanges have their challenges. They’re mainly the shortage of liquidity, which suggests the lack of money on an exchange makes trading faster and more efficient.

Uniswap seeks to remedy the liquidity of decentralized exchanges by allowing the exchange to trade tokens without relying heavily on sellers and buyers to create such liquidity.

Below, we explore how Uniswap works. Also, how it has become one of the top Ethereum-based exchanges and how to connect your Coinbase wallet with it.

What is Uniswap?

uniswap

Uniswap was founded and developed by Hayden Adams, who, according to him, was inspired to create the protocol in an article by Ethereum founder Vitalik Buterin.

Uniswap is an Ethereum protocol for exchanging ERC20 tokens. Unlike most exchanges designed to charge commissions, Uniswap is designed to function publicly. It is a mechanism for the community to trade their tokens without a platform or intermediary commissions. Plus, unlike most exchanges, which bring together buyers and sellers to price and execute trades, Uniswap uses a simple mathematical equation and a set of chips and ETH to do the same job.

What is the special feature of Uniswap?

The main distinction of Uniswap from other decentralized exchanges (DEX) platforms is the use of a pricing mechanism which is called the “constant product market maker model.”

This means that any token can be added to Uniswap by funding it with an equivalent amount of Ethereum (ETH) and the exchanged ERC20 token. For example, if you want to trade an alternative currency say Loge Coin, you would launch a new Uniswap smart contract for Loge Coin Token. Also, you will create a liquidity pool with $50 in Loge coin tokens and $50 in ETH.

The difference with Uniswap is that instead of connecting buyers and sellers to determine the price of the Loge token, Uniswap applies a constant equation: x*y = k.

In the equation employed by Uniswap, x and y represent the number of ETH and ERC20 chips available in a money pool, and k is constant. This equation uses the balance between ETH and ERC20 chips and supply and demand to determine the price of a particular token. Every time someone buys a Loge token with ETH, the supply of Loge tokens decreases while the supply of ETH increases; the price of the Loge token increases.

As a result, the price of Uniswap tokens can only be changed in the event of exchanges. Uniswap balances the value of tokens and trades them based on the number of people who want to buy and sell.

Getting Started with Uniswap

Before you can learn how to use uniswap with your Coinbase wallet, you will need Ethereum (ETH). Whether you use a computer or a mobile device (assuming Coinbase is the chosen CEX), buying ETH is easy.

  • Create your Coinbase account
  • Connect your preferred payment option to your account (such as a debit card).
  • Buy ETH!

After purchasing ETH, there are two ways to connect your Coinbase wallet to Uniswap to consider before you start trading.

Note: Coinbase uses escrow wallets, which means it doesn’t keep track of your private keys. For a more secure solution, self-managed wallets like Metamask or Trust Wallet are just a few good options.

We are going to discuss the instructions for connecting Uniswap to your Coinbase wallets.

How to connect your Coinbase wallet with Uniswap using a Desktop

  • Step 1: Download the Metamask browser extension.
  • Step 2: Go to Uniswap and tap the Connect button in the top right corner.
  • Next step (Step 3): Copy the wallet address by clicking the same button again when you log in to Uniswap. A small window will open with the Copy address option.
  • Step 4: In a separate tab, go to Coinbase and sign in to your account. Select your ETH wallet, choose the amount you want to send.
  • Step 5: Enter the wallet address you previously copied from Uniswap into the empty field as the recipient address.
  • Step 6: After making this transmission, return to Uniswap to trade your Ethereum for a variety of tokenized ERC-20 assets.

You can now trade on Uniswap using the ETH provided in your Coinbase account!

Note: Unless the ETH network is very congested, a simple tx to send ETH between wallets should be confirmed quickly. However, confirmation can sometimes take up to an hour or more!

How to connect your Coinbase wallet with Uniswap using a Mobile Device

Below are the steps you need to take:

  • One: First, make sure you have both the Coinbase app and the Coinbase Wallet app. The Coinbase custodial Wallet and the Coinbase CEX Wallet work in two different apps.
  • Two: Open the Coinbase Wallet app and go to Settings.
  • Three: Select the Settings tab, look for an option that says “Sign in to your Coinbase account” and click on it.
  • Four: After you have connected your Coinbase account to the Coinbase Wallet app, you can safely close your wallet and open the main Coinbase app.
  • Five: Select the ERC-20 token you wish to send (in this case, ETH) and fill in the transaction details (tx/txs). Once the tx is confirmed, ETH should appear in the Coinbase Wallet app. Locate the Dapps page, click on Discover Dapps, and click on Uniswap.

You can now trade on Uniswap using the Coinbase Wallet mobile app!

Last Words

Ensure to check out some of our articles for more guides to help you navigate the exciting world of cryptocurrency.