Uniswap v1 to v4 is the same machine with better tools. This Uniswap v1 to v4 guide is for beginners. Each version fixed what the last one could not do. Traders swap. Liquidity providers stock the shop.
Mix the two roles, and v3 becomes impossible.
What Uniswap v1 to v4 is
A centralized exchange matches two people. A trade happens when “I will buy at this price” meets “I will sell at that price.”
Uniswap does not match two people. It keeps two assets inside a smart contract. Put one asset in, and a formula decides how much of the other asset comes out. That pot of money is a pool. The ratio inside the pool is the price.
Example: a pool holds 10 ETH and 10,000 Apple Coins. One Apple Coin is worth about 0.001 ETH. If you put in 1 ETH and take Apple Coins out, the pool has more ETH and fewer Apple Coins. The next buyer pays a slightly worse price.
Think of an exchange booth with no clerk. The inventory ratio in the safe is today’s rate. Uniswap is person-to-pool, not person-to-person.
Two roles, from v1
The same screen hides two jobs. That is true across Uniswap v1 to v4.
- The trader swaps and leaves. ETH in, token out. Token in, ETH out.
- The liquidity provider, or LP, deposits both assets and leaves them there. Other people’s swaps pay a fee. If the pool ratio changes, the mix the LP later withdraws also changes.
The LP role did not begin in v3. It existed in v1. Beginners often think early Uniswap was “buy only.” That is a screen problem. The swap button is obvious. The deposit screen shows up later.
Young-hee puts in ETH and buys Apple Coins. She is a trader. Min-su puts in ETH and Apple Coins and stocks the shop. He is an LP. Every time Young-hee swaps, Min-su earns a fee, and his inventory mix shifts a little.
v1: cash only
Uniswap v1 launched in 2018. It mostly swapped ETH for a token. Direct token-to-token pools were not the point.
The formula was x × y = k. The product of the two balances stays the same. If one side grows, the other shrinks. The question was simple: can a formula set prices without an order book?
Pool: 10 ETH and 1,000 Apple Coins. Constant: 10 × 1,000 = 10,000. Deposit 1 ETH, and the pool has 11 ETH. Apple Coins must fall to about 10,000 ÷ 11 ≈ 909. You leave with about 91 Apple Coins. A larger swap moves the price more. The next person gets less. That gap is slippage.
If you hold Banana Coins and want Apple Coins, v1 usually means Banana → ETH → Apple. Two swaps mean two fees and two hits to the price. It is a shop that accepts cash only. Gift cards cannot swap with gift cards.
v2: anyone can open a shop
v2 arrived in 2020. Token-to-token pools became normal. Anyone could create a pool and add liquidity. That liquidity sat across every price, from 1 to 1,000,000.
This is when Uniswap became widely used. People could open a market without asking a company for permission.
Min-su deposits 5,000 Apple Coins and 5 ETH. He is stocking the shop, not trading. If someone sells Apple Coins and takes ETH, Min-su’s share holds more Apple Coins and less ETH. He is paid a fee.
Su-jin has only Banana Coins and Apple Coins. In v2 she can open a Banana-Apple pool. She does not have to touch ETH.
The limit: Apple Coin trades at 1,000, and almost all flow happens between 950 and 1,050. Min-su’s 1,000,000 still sits on shelves for 10 and for 1,000,000. A lot of money is deposited. Only some of it is working. It is a convenience store that stocks winter packs even when everyone is buying milk.
v3: choose a price range
v3 arrived in 2021. The change was concentrated liquidity. An LP can say: use my money only between price A and price B. Inside that band, the same capital sits denser. Outside it, the capital does not make trades.
v2 was easy and wasteful. v3 put money where trades actually happen. In the examples below, Min-su is not buying. He is an LP depositing 1,000,000.
Apple Coin is 1,000. Min-su thinks the market will stay between 900 and 1,100, so he places all 1,000,000 there. A buy at 1,020 uses his inventory and pays him a fee.
Young-hee spreads 1,000,000 across all prices, v2-style. Min-su keeps his 1,000,000 inside 900–1,100. If customers stay near 1,000, Min-su’s goods are used more often. Same capital. Deeper shop.
If Apple Coin falls to 800, the 800 buyers walk past Min-su’s shelf. The money is still there. It is just off the path. He usually ends up with more of the cheaper asset. That is impermanent loss. If price returns to 1,000, much of it can unwind. Until then, he may earn no fees.
The usual mistake is “I will buy at 900 and sell at 1,100.” No. A v3 LP is not placing two limit orders. The LP is staffing an automatic booth inside one price band. Ice cream on the summer rack sells well in summer. In winter it sits in storage. It did not vanish. The path moved.
v3 did not invent the LP. It gave LPs a control panel for location. It still could not attach new rules to the shop.
What v3 still could not do
- Opening a pool was expensive. Each pair behaved like a new contract.
- Fee tiers were a fixed menu: 0.01%, 0.05%, 0.30%, 1.00%. Some markets wanted 0.10% and could not have it.
- Native ETH was awkward. v3 often wanted wrapped ETH first.
- Multi-hop swaps were heavy. Apple → ETH → Banana meant extra settlement at every hop.
- New rules meant building another exchange. Fees that rise in a crash, allowlisted wallets, or post-swap inventory rules were hard to plug into an existing pool.
- LPs had too much homework. A wrong range parks capital off the path. v4 does not erase that homework. It lets software take it.
What v4 added
v4 reached Ethereum mainnet in late January 2025. The headline was not a new pricing formula. Opening a pool got cheaper. Attaching rules became possible. That is the last step in Uniswap v1 to v4.
The main addition is a hook: a smart contract bound to a pool. It can run when the pool is created, when a swap happens, and when liquidity moves. One manager contract holds many pools, so creating a pool is closer to adding a ledger row than building a new shop. Accounting can wait until the end of a transaction. Native ETH is easier to use.
A hook can raise fees in a crash, admit only approved wallets, or act after a swap by trimming surplus tokens and rerouting fees. The v3 supermarket remains. Now each aisle can install an app.
A hook is chosen when the pool is created. You cannot bolt a different hook onto that pool later. A hook does not erase Uniswap’s core math. If you attach a rule, you also attach that rule’s bugs.
v3 improved placement. v4 improved policy.
Who feels v4
Everyday traders are not the first audience. Developers feel it most: they keep the Uniswap shopfront and install a rule instead of copying an exchange. Teams launching markets feel it next. Some professional LPs notice dynamic fees or automated ranges. Everyday traders may notice lower gas or native ETH only now and then. A centralized-exchange screen is not Uniswap.
Developers can now set different rules per pool, turn fees into policy, put a door on who may trade, and let a hook manage inventory. For them, v4 is not “build another DEX.” It is “load an app onto Uniswap.”
One scene, four versions
Min-su wants to sell Apple Coins and receive ETH. Watch the same job move through Uniswap v1 to v4.
- v1. He uses the ETH-Apple machine. Banana must go through ETH first.
- v2. He can use Apple-ETH or Apple-Banana. Inventory is spread across all prices.
- v3. Goods sit only on the 900–1,100 shelf. If price leaves, those goods rest.
- v4. That shop can install extra rules after the swap.
Min-su can be trader or LP. The role names do not change. The tools do.
Uniswap v1 to v4 FAQ
What is Uniswap v1 to v4 in one line? Uniswap v1 to v4 is one pool model that gained better tools: token pairs in v2, price ranges in v3, and hooks in v4.
Do I need to use every version? No. Most wallets route through current pools. Uniswap v1 to v4 matters because it explains why a pool behaves the way it does.
Is Uniswap v1 to v4 only for developers? No. Traders and LPs existed from v1. Developers feel v4 first, but the same two roles run through Uniswap v1 to v4.
What to remember
Uniswap is an automated jar, not an order book.
Traders and LPs existed in v1. v3 let LPs choose a price range.
v4 attaches rules to the jar and turns Uniswap from a product into a platform.