Uniswap (Decentralized Trading Protocol)

Uniswap is an automated liquidity protocol. In practical terms this means there are template smart contracts that define a standard way to make liquidity pools and corresponding markets that are compatible with each other. There is no orderbook, no centralized party and no central facilitator of trade. Each pool is defined by a smart contract that includes a few functions to enable swapping tokens, adding liquidity and more. At its core each pool uses the function x*y=k to maintain a curve along which trades can happen. The pools keep track of reserves(liquidity) and updates those reserves every single time someone trades. Because the reserves are automatically rebalanced, a Uniswap pool can always be used to buy or sell a token without requiring a counterparty on the other side of a trade.