What is Uniswap and how do people lose money on it?
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Uniswap is a decentralized exchange (DEX) where anyone can trade ERC-20 tokens without a centralized intermediary. People lose money through: buying scam tokens (rug pulls are trivially easy to deploy on Uniswap), impermanent loss as an LP, high gas fees eating into small trades, and slippage on low-liquidity tokens. Because Uniswap is permissionless, there is no fraud prevention — all responsibility is on the user.
What is the difference between Uniswap V2 and V3?
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Uniswap V3 introduced concentrated liquidity — LPs can specify price ranges for their capital, making liquidity provision significantly more capital-efficient but also more complex. V3 positions earn more fees when the price stays in range but suffer greater impermanent loss when it moves out of range. V2 uses simple 50/50 full-range liquidity pools. Most casual LPs use V2-style logic; sophisticated LPs use V3 range orders as a strategy.
