Deep Dive into Uniswap V2 Inner Workings

UniswapV2 is one of the most popular DeFi trading protocols out there and is responsible for securing billions of dollars in capital, having been deployed throughout multiple blockchains after its terrific launch on Ethereum. Though UniswapV2 is used extensively by hundreds of thousands of traders and investors, almost no one understands the mathematical underpinnings of liquidity pools, and how those translate, in practice, to actually trading through them.

These series of articles study the main mathematical equation behind UniswapV2, and by manipulating this equation, we draw multiple enlightening conclusions that we hope might help traders make better trading decisions in the future. Although multiple equations will be shown in these articles, if those aren’t your cup of tea you can jump to the conclusions after each section.

In this Deep Dive series you will learn:

What the UniswapV2 mathematical function is all about and how it works

How price is discovered when trading tokens

What is slippage and how it works

What is Uniswap V2 liquidity and what are liquidity pool tokens

How depth affects price action

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