Glossary

https://docs.uniswap.org/contracts/v2/concepts/protocol-overview/glossary

• Total Value Locked(TVL): [the total value of assets](https://www.investopedia.com/total-value-locked-7486821#:~:text=Total value locked (TVL) is,decentralized finance (DeFi) projects.); Liquidity.

• Liquidity Provider(LP), Pair, Pool, Factory

• Impermanent Loss: value of your deposited assets at the time of withdrawal can be less than if you had simply held those assets separately due to price changes between them.

• Stacking: Token을 liquidity pool에 저장하는 행위

• Liquidity token: LP가 token을 stacking 후 받는 token; UNI-V2 tokens(ERC20; e.g., USDC-WETH) in V2 and NFT(ERC721) in V3.

• Slippage: 내가 구매하고 싶은 가격과 실제로 구매된 가격의 차이

  • Liquidity pool size is low; slippage is high because liquidity is not enough.

• Router

  • Token swap할 때 가장 효율적인 교환으로 최적화(e.g., UNI↔DAI pool이 없다면, UNI↔SUSHI↔DAI로 교환)

How does De-Fi works

1. LP가 Liquidity pool에 ERC-20 token or stablecoin을 stacking
   1. liquidity provider: addLiquidity + mint liquidity tokens.
   2. addLiquidity: each token contract address is filled with tokens in the pair contract address.
   3. How LPs get paid: when LPs withdraw their liquidity, they get their share plus the accumulated fees.
2. Traders: swap

Uniswap

• Uniswap V1: ERC-20 ↔ Ether
  • Problem: higher cost and slippage
• Uniswap V2: ERC-20 ↔ ERC-20
  • V1 problem solution: Router
  • core: singleton factory and many pairs
  • periphery: add liquidity, swap