Participants
Liquidity Providers (LPs)
Section titled “Liquidity Providers (LPs)”These participants supply equal values (not equal amounts) of two ERC-20 tokens to a pool to facilitate trades. Their incentive is to earn trading fees, though they risk impermanent loss if the relative price of the tokens deviates significantly from their entry point.
Traders
Section titled “Traders”These users interact with the protocol to swap one token for another instantly. They benefit from the lack of a middleman but pay a 0.3% fee and incur price impact based on the size of their trade relative to the pool’s depth.
Arbitrageurs
Section titled “Arbitrageurs”These participants monitor price discrepancies between Uniswap and external market rates. Their economic role is to re-align the pool price with the global market price by trading for a profit, which also ensures the accuracy of the protocol’s price feeds.
Protocol Developers/Integrators
Section titled “Protocol Developers/Integrators”External smart contracts use Uniswap as a foundational DeFi primitive for price discovery (oracles) or to provide liquidity for their own applications.
Fee Beneficiary (Governance)
Section titled “Fee Beneficiary (Governance)”If activated by a specific private key (feeToSetter), the protocol can redirect 1/6th of the 0.3% trading fee (effectively 0.05% of the trade amount) to a designated address.