How to Trade for Pennies with Uniswap on L2
Before we get started, DeFi Dad wanted to disclose he holds UNI. This is not a recommendation or endorsement to buy UNI, but it is intended to disclose any bias he might have in talking about Uniswap’s latest product release on L2 with Optimism.
Today’s tutorial will be a short one! For years, we’ve been talking about Ethereum and building Layer 2 solutions (L2) to enable users to transact at faster speeds, for pennies in fees, while enjoying the benefits of decentralization and security on Ethereum.
For background, Optimism has been one of the leading teams developing an L2 solution for Ethereum, describing itself as
“Public Benefit Corporation (PBC), a for-profit corporation intended to produce a public benefit and operate in a responsible and sustainable manner. This means that we are obligated to balance the pecuniary interests of our stockholders with the best interests of those materially affected by our conduct, as well as a specific “public benefit charter” we incorporated with.”
Since July 13th, anybody can deposit, trade and provide liquidity using Uniswap V3 on OΞ (Optimistic Ethereum). There are still safeguards in place to prevent usage from skyrocketing.
Today, anyone with a MetaMask wallet can easily bridge L1 assets into L2. The bridge currently supports DAI, WBTC, USDT, EURT, ETH, and SNX, with an interface for adding new assets coming soon.
Optimism is enforcing fees on Optimistic Ethereum, with a conservative target of 50,000 transactions per day at launch, “to be targeted with an EIP1559-like congestion pricing mechanism, to be ramped up over time”.
The key takeaway here is anyone can now enjoy the speed and affordability of transacting in DeFi with Optimistic Ethereum!
How to Trade for Pennies with Uniswap on L2
Today is not about yield. It’s about the future of transacting for pennies while enjoying the network effects and security of DeFi on Ethereum. I’ll show you how I deposited ETH to Optimistic Ethereum (L2) and started using Uniswap, one of the most respected and popular applications in DeFi.
Please also be aware of a few major risks.
- Smart contract risk in Optimism and Uniswap contracts.
- Oracle failure could also contribute to a loss of funds.
- Pegged assets can de-peg.
- As always, this is not financial advice.
Here’s how to get started trading on Uniswap with Optimistic Ethereum!
1 – First, I need to deposit / bridge assets to Optimism just like I would for Polygon, BSC, etc. I go here to the Optimism Gateway where I can deposit or withdraw assets.
2 – I specify how much ETH or DAI, WBTC, USDT, EURT, and SNX to deposit. If it’s a token other than ETH, I’ll be prompted to Approve and then Deposit in MetaMask.
3 – Once the app confirms my tokens deposited into Optimism, I now need to get Optimism network settings into my MetaMask. I click the Withdraw button on the Optimism Gateway just to accomplish this and follow the prompts on MetaMask just to add Optimism network settings.
4 – I’m ready to trade so I flip MetaMask’s network setting to Optimism network, and then go to the Uniswap app where I can trade or provide liquidity.
5 – Lastly, I proceed to trade on Uniswap the same way I would on Ethereum but with the speed and cheap costs of using Optimistic…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
