# Uniswap: Profit of the automated 3D FOMO pricing mechanism success or failure

Welcome to Uniswap

Don’t worry. The first one is free ;)

# What are Decentralized Exchanges and Uniswap

• Formal verification of the core smart contracts
• Code review of core smart contracts
• Numerical error analysis
• Code review of periphery smart contracts (during ongoing development)

# Uniswap Automated Market-making (AAM) 3D FOMO pricing mechanism

`Constant Product Market Makerx * y = kwhere x is token x quantity y is token y quantityand k = constant`
`x * p = k10 * 1000 = 10 000priceETH = y/x = 1000 / 10 = 100DAI = x/y = 10 / 1000 = 0.01`

`(10-1) * (1000 + x) = 100009 * (10000+x) = 100001000 + x = 10000 / 910000 / 9= 1000 + x = 1111.11x = 1111 - 1000= \$111The price of ETH is now changed \$111`
`10 * 1000 = 10000by buying 1 ETH, your impact on the price will be 10%but if there's more tokens in the pool10000*100000 = k K is much largerThis would have an impact of less than 1% of the price`

# Why does Impermanent Loss occur?

## Impermanent loss calculations

`Constant Product Market Makerx * y = kx is token x quantity y is token y quantityk = constant`
`x * y = k100 * 10000 = 1000000k = 1000000x as Ethereum tokensy as USDT tokens`
`ETH_pool * USDT_pool = constant`
`ETH_price = ETH_pool / USDT_poolETH_price = 10000 / 100ETH_price = 100With this formula we calculated back the ETH price on uniswap by only knowing the 2 different assets in the pool (ETH and USDT)`
`ETH_pool = sqrt(constant_product / eth_price)USDT_pool = sqrt(constant_product * eth_price)ETH_pool = sqrt(1000000 / 100)ETH_pool = 100USDT_pool = sqrt(1000000 * 100)USDT_pool = 10000`
`ETH_pool = sqrt(constant_product / eth_price)ETH_pool = sqrt(1000000 / 120)ETH_pool = 91.2870929175USDT_pool = sqrt(constant_product * ETH_price)USDT_pool = sqrt(1000000 * 120)USDT_pool = 10954.4511501`
`0.9129 * 120 = 109.548`
`1 ETH which is \$120 and our orginal \$100 in USDT is \$220`

# Profit from Uniswap by investing or shorting UNI Token

`0.069% to advisors with 4 years vesting17.80% to investors with 4 years vesting 21.51% to team members with 4 years veting 60% to community members`

# More medium articles?

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