Uniswap is getting attention both as a simple way to swap funds from one EC20 token to another, and as a way to earn from crypto holdings by providing liquidity to the market. 

Uniswap is a protocol running on Ethereum, it enables swaps without the normal need of an exchange to have both active buyers and sellers.  It does this via an algorithm that automatically sets the value of an exchange based on how much demand there is, also adjusting to encourage arbitrage so as to achieve balance with market rates.

If you place tokens into a liquidity pool contract you get a share of the 0.3% transaction fee for swaps, in proportion to your share of the pool. Currently, all fees go to the pool participants. 

It sounded interesting, so I gave it a try.

The interface at www.uniswap.org is straightforward, and linking it to a wallet flowed well from my phone.

However, look at the data below on the DAI / BAT pair. 

Fees earned by the whole pool, $0.24 in the past 24 hours.

My Uniswap error?

I played rather than invested! I put just a combined value of less than $20 dollars worth of BAT and DAI into the contract. So i'm earning a fraction of a percent of 0.3% of that $0.22 fee. 

I paid around $1.20 in mining fees to move of those DAI and BAT tokens from an exchange into my wallet and on into the contract. Claiming the tokens and rewards will attract more mining fees, out of all proportion to the transaction!

Oops. 

So unless Uniswap transaction numbers go through the roof I will not see a return on this for a long time.

It is basic stuff to keep an eyes on fees.

No harm done, a price worth paying for learning a bit more about this innovative DeFi project!