How to use automated trading strategies to generate ROI on Uniswap

Uniswap is a cost-effective option for ERC20 token projects looking to list on a decentralized exchange that has real liquidity and consequently a large pool of organic traders. Unlike a centralized exchange, Uniswap uses an automated market maker (AMM), which makes traditional market-making and algorithmic trading strategies redundant on its platform, as Uniswap does not have a “spread” and traditional order books.

However, some cutting-edge algorithmic trading firms have developed automated trading bots that allow token projects to generate a profit by capitalizing on arbitrage opportunities between Uniswap and centralized exchanges, as well as by automating other trading strategies that are outlined below.

Arbitrage: By maintaining a tight spread on the large centralized exchanges where your token is listed, you prevent arbitrage opportunities between Uniswap and those centralized exchanges (CEXs). This can be achieved by working with an algorithmic trading firm (also called a crypto market maker) that has an existing connection with the CEXs where your token is listed.

Conversely, when your token has achieved substantial organic volume and liquidity on the CEXs where it’s listed (due to proper market-making), this will attract new traders and increase liquidity, which allows you to profit by capitalizing on arbitrage opportunities between Uniswap and the CEXs where your token is listed.

Limit Orders: Advanced automated trading systems can monitor your token's Uniswap market at all times and automatically execute orders when a certain target price (or volume, liquidity) is reached to sell off or buy up tokens. Of course, platforms like 1inch provide this functionality as well, but a dedicated crypto market maker can automate any buyup or selloff strategy you can think of.

Uniswap Market Makers: Though the development of algorithmic trading systems on Uniswap is in its infancy, we believe Kairon Labs is leading the pack in developing automated trading systems designed specifically for Uniswap and other popular decentralized exchanges such as Sushiswap.

Our firm is a boutique algorithmic trading firm (also known as a crypto market maker), based in Belgium with trading and sales hubs in Asia and South America ensuring 24/7 coverage. We have helped several altcoins and token projects achieve significant market capitalization and deep liquidity. You can find more information about Kairon Labs’ deep understanding of Uniswap mathematics here.