Automated market maker

An automated market maker is a smart contract on Ethereum that hold on-chain liquidity reserves. Users can trade against these reserves at prices set by an automated market making formula.

Constant product formula

The automated market making algorithm used by Uniswap. See x*y=k.


ERC20 tokens are fungibile tokens on Ethereum. Uniswap supports all standard ERC20 implementations.


A smart contract that deploys a unique smart contract for any ERC20/ERC20 trading pair.


A smart contract deployed from the Uniswap V2 Factory that enables trading between two ERC20 tokens.


Liquidity within a pair is pooled across all liquidity providers.

Liquidity provider / LP

A liquidity provider is someone who deposits an equivalent value of two ERC20 tokens into the liquidity pool within a pair. Liquidity providers take on price risk and are compensated with fees.

Mid price

The price between what users can buy and sell tokens at a given moment. In Uniswap this is the ratio of the two ERC20 token reserves.

Price impact

The difference between the mid-price and the execution price of a trade.


The amount the price moves in a trading pair between when a transaction is submitted and when it is executed.


Smart contracts that are essential for Uniswap to exist. Upgrading to a new version of core would require a liquidity migration.


External smart contracts that are useful, but not required for Uniswap to exist. New periphery contracts can always be deployed without migrating liquidity.

Flash swap

A trade that uses the tokens being purchased before paying for them.

x * y = k

The constant product formula.


The “k” value in the constant product formula