What can be improved
Paper money is not accepted
Uniswap does not allow you to buy cryptocurrency using fiat money, such as the US dollar. You must already have crypto in a crypto wallet that you connect to the exchange.
This is common among decentralized cryptocurrency exchanges, which is why not many ask for personal information about customers. It’s still a huge inconvenience. Before you can use Uniswap, you need to purchase cryptocurrency elsewhere. Several users do this on another crypto exchange, transfer that crypto to a wallet, and then connect the wallet to Uniswap.
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high gas charges
Gas fees are transaction fees charged by the blockchain. Uniswap is built on Ethereum. Due to the massive popularity of Ethereum, the blockchain experienced congestion, which resulted in increased gas fees. While Uniswap itself charges low fees, merchants also pay Ethereum gas fees. They can be expensive, especially in small transactions.
For example, gas charges are often at least $30 to $50, depending on current crowding at the time. That’s regardless of the amount – so if you’re trading $1,000 worth of cryptocurrency, it could cost 3% or more in gas fees. Deals of $100 or less aren’t worth it, because gas fees can cost 30% or more.
Ethereum is moving to a proof-of-stake system, and one of the advantages is more efficient transactions with much lower fees. But at the moment, Uniswap is only really useful for high-value transactions.
Risk of non-permanent loss when storing
One of the most exciting aspects of Uniswap is stacking cryptocurrencies in liquidity pools – instead of just holding cryptocurrencies, you can earn interest and grow your holdings. Many liquidity pools earn very high interest rates, however, liquidity pools also carry the risk of non-permanent loss. This is when the value of your cryptocurrency drops from the time you bet in a liquidity pool. If this happens, you may lose money.
The risk of non-permanent loss is higher with more volatile cryptocurrencies. Often these are the cryptocurrencies where you can earn the most interest, so it is important not to choose the cryptocurrency you share solely with potential rewards.
No Know Your Customer (KYC) process
Since it does not require creating an account, Uniswap does not have a KYC process. Whether this is good or bad depends on your point of view.
For traders who want to keep their activities private, exchanges like Uniswap are ideal. The problem is that exchanges without KYC are more likely to encounter regulatory issues. Crypto enthusiasts may appreciate anonymous cryptocurrency trading, but their governments and tax authorities do not.
The Securities and Exchange Commission (SEC) launched an investigation into Uniswap in 2021. Although the exchange has not yet faced legal issues, it and other decentralized exchanges without KYC could be first on the list in the future.