Central to Uniswap's functionality is its Automated Market Maker (AMM) system, a revolutionary approach to trading that does away with traditional order books. By employing liquidity pools and a mathematical formula (x*y=k) to calculate token prices, Uniswap ensures efficient, decentralized trading without the need for intermediaries. However, we will also scrutinize the inherent risks associated with providing liquidity, including impermanent loss.