Uniswap

Uniswap is a decentralized exchange protocol and the leading DEX in DeFi, enabling automated token swaps through liquidity pools across 19+ blockchain networks. It provides no-fee trading, deep liquidity, and a suite of products including a web app, wallet, and developer APIs. The protocol serves traders, liquidity providers, and developers building onchain applications with its v2, v3, and v4 smart contract systems.

In Uniswap, yield (earnings) comes only from liquidity provision fees. The protocol does not create yield through token printing ("emissions") or through simply holding and locking tokens ("staking").

Liquidity providers deposit two tokens as a pair into trading pools. When users swap between those tokens, a small fee is charged. Providers earn a share of those fees based on their portion of the pool.

The fee amount depends on which version of Uniswap the pool uses:

• Uniswap v2 pools charge a flat 0.30% fee on each swap.
• Uniswap v3 introduced multiple fee tiers: 0.01%, 0.05%, 0.30%, or 1%. It also allows providers to concentrate their liquidity within a specific price range, which can increase fee earnings if the price stays in that range.
• Uniswap v4 adds "hooks" – custom code that can adjust fee logic for more flexibility.

Fees are distributed proportionally: if you provide 1% of a pool's tokens, you receive 1% of the trading fees generated by that pool.

Uniswap's governance could activate a protocol fee – taking up to 25% of pool fees and directing them to UNI token holders. However, this feature is not currently active.

Beyond the main pools, UniswapX offers another way to earn. Here, "fillers" fulfill swap orders off-chain and settle them on-chain, earning fees for this service.