If two ERC20 tokens are not paired directly, and do not have a common pair between them, they can still be swapped as long as a path between them exists. Having direct ERC20/ERC20 pairs can also improve prices because routing through ETH for a swap between two other assets (say, DAI/USDC) involves paying fees and slippage on two separate pairs instead of one. One example would be a DAI/USDC pair, which should theoretically have little volatility for liquidity providers, but is useful for trading. However, the introduction of ERC20 token/ERC20 token pools in Uniswap V2 can be useful for liquidity providers, who can maintain more diverse ERC20 token denominated positions, without mandatory exposure to ETH. Since ETH is the most liquid Ethereum-based asset, and does not introduce any new platform risk, it was the best choice for Uniswap V1. Having a constant numeraire provides a nice UX advantageвЂЉ-вЂЉusers can swap any ERC20 for any other ERC20 by routing through ETH. In Uniswap V1, all liquidity pools are between ETH and a single ERC20 token. Wrapped Ether (WETH) is used instead of native ETH in the core contracts, although end users can still use ETH through helper contracts. In Uniswap V2, any ERC20 token can be pooled directly with any other ERC20 token. Uniswap V2 Documentation (in progress!).This article will serve as a high-level overview of these changes including: Uniswap V2 is our second iteration of Uniswap and includes many new features and improvements. For this reason, last year we raised a seed round and formed a dedicated team to research and develop Uniswap alongside the broader Ethereum community.

However, pooled automated liquidity remains nascent technology, and we have only just begun to realize its potential. Uniswap V1 will continue to work for as long as Ethereum exists, and so far, it has worked very nicely for a wide variety of use cases.

Uniswap V1 was the proof-of-concept for a new type of decentralized marketplace.ДЄs a venue for pooled, automated liquidity provision on Ethereum, the Uniswap protocol (Uniswap) functions without upkeep, providing an unstoppable platform for ERC20 token conversion.

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