How To Short Uniswap (UNI)

    • James Page

James HeadshotAuthor: James Page - Last Updated on June 28, 2022

Summary: Shorting Uniswap is pretty straightforward, all you need is a crypto exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.

We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.

Global: Sign up with eToro

USA: Sign up with eToro US

Uniswap

Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.

It might sound a bit complex but don’t worry, it’s a lot easier than you might think.

How to Short Uniswap

Shorting Uniswap can be done in 4 steps:

  1. Find a cryptocurrency exchange
  2. Sign up with the exchange
  3. Fund your account with fiat or crypto
  4. Short Uniswap

1. Find a crypto trading platform

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other cryptocurrency exchange that allows for short selling.

etoro crypto

2. Sign up with the cryptocurrency exchange

Let’s start with creating an account on eToro.

Global: Sign up with eToro

USA: Sign up with eToro US

 

eToro sign up form

The sign-up process is very easy and quick, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your account

Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short Uniswap

These are the steps to follow to execute a short sell:

  1. Go to the search bar at the top, find Uniswap by entering the name.
  2. On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  3. At the top of the trading interface: Click on sell to short the crypto.
  4. Enter the amount for which you want to sell Uniswap and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of Uniswap has dropped, go to your Portfolio, find the Uniswap trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short Uniswap!

Global: Sign up with eToro

USA: Sign up with eToro US

 

Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.

 

Where to Short Uniswap (UNI)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.

 

Frequently Asked Questions

Can I short Uniswap on Binance?

Yes, you can short Uniswap on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.

About Uniswap

UNI is a governance token for Uniswap. UNI was introduced in a retro airdrop on 16/09/2020 to users who have interacted using the protocol either by trading tokens, or by providing liquidity.

The UNI token lets token holders participate in the governance and administration of the protocol. A governance vote is required to make important decisions about the future of the protocol, such as how it will be used or whether future upgrades will be made.

Uniswap allows users to easily swap ERC-20 tokens for another ERC-20 token using a decentralized platform (DEX). A DEX means that traders don't need to deposit their tokens onto an exchange, and they are not subject to the security risks of a traditional centralized exchange.

Metamask, an Ethereum wallet, is all that's required to start exchanging tokens. Users can then exchange tokens directly, without needing an orderbook. This works with an Automated Market Maker. Liquidity Providers are able to deposit tokens into a smart contract. The liquidity then provides a quote to traders. It does not rely on professional market makers. Liquidity providers receive 0.3% trading fees for providing liquidity to the protocol.

Hayden Adams created the protocol in 2018. Hayden Adams founded the protocol in 2018.

An AMM uses an algorithm to price assets. Uniswap uses a formula called "x*y=k” to price its assets. In the formula, x refers to the liquidity pool token, y the asset amount, and K is a fixed constant. Uniswap keeps the ratio of assets 50 to 50.

Uniswap became a big advocate for the AMM Model. A number of other crypto protocols have also begun to use the AMM Model due to its innovative, decentralized features. Impermanent loss is the main problem with the AMM model.

Impermanent losses are the opportunity costs of adding two crypto assets to a liquidity bank instead of keeping the two assets separate outside the liquidity bank. Impermanent Loss occurs when one token's market price fluctuates relative to another. The impermanent damage will be greater the greater the change.

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