The backbone of a decentralized finance protocol like Uniswap is the liquidity pool. A liquidity pool is a massive collection of tokens highly secured by a smart contract. It is the lavishness of these tokens that facilitates tradeability.
Read more at:
https://medium.com/security-token-offering/defi-based-decentralized-exchange-protocol-like-uniswap-a-quick-guide-2d3a2fccae83
