Sign in Subscribe

What is Uniswap (UNI)?

Uniswap operates as a decentralized exchange (DEX), enabling users to engage in cryptocurrency trading without the involvement of a central authority. Uniswap employs an automated market maker (AMM) framework to conduct transactions, automating the process through smart contracts rather than relying on human order books.

With a daily trading volume surpassing $1 billion, Uniswap stands as one of the most widely used DEX platforms worldwide. Its appeal lies in its user-friendliness, low transaction fees, and an extensive array of available trading pairs.

The driving force behind Uniswap's functionality is the UNI token. UNI serves as a governance token, granting its holders the ability to participate in voting processes that influence changes to the Uniswap protocol. Additionally, UNI holders can stake their tokens to receive rewards.

Uniswap distinguishes itself from conventional exchanges in several significant ways. Firstly, it operates in a decentralized manner, free from the control of any single entity, which enhances its security and resilience against censorship.

Secondly, Uniswap's utilization of an AMM model automates trade execution via smart contracts, delivering greater efficiency and scalability compared to traditional exchange platforms.

Lastly, Uniswap's diverse range of trading pairs allows users to trade a wide spectrum of cryptocurrencies, including those not typically available on traditional exchanges.

How does Uniswap (UNI) work?

Uniswap operates by maintaining liquidity pools dedicated to each trading pair. These liquidity pools consist of cryptocurrencies deposited by users seeking to earn rewards for contributing liquidity to the platform.

When users wish to trade cryptocurrencies on Uniswap, they simply interact with a specific liquidity pool. The Automated Market Maker (AMM) then computes the exchange rate based on the supply and demand of the two cryptocurrencies within that liquidity pool.

Upon calculating the exchange rate, users can proceed to exchange their cryptocurrency for their desired counterpart. Subsequently, the AMM takes care of rebalancing the liquidity pool to ensure that the supply and demand equilibrium of the two cryptocurrencies is maintained.

The Historical Evolution of Uniswap (UNI)

Uniswap's inception in 2018 can be credited to Hayden Adams, a former Siemens software engineer with a vision for creating a decentralized exchange, allowing cryptocurrency trading without reliance on a central authority.

Adams unveiled the initial iteration of Uniswap in November 2018. Initially designed for Ethereum token trading, the platform rapidly expanded its capabilities to accommodate ERC-20 tokens and introduced innovative features like flash swaps.

In 2020, Uniswap saw the launch of its significant upgrade, Uniswap V2. This upgrade introduced numerous enhancements, including support for concentrated liquidity, multiple fee tiers, and integration with oracle services.

Uniswap's user-friendly interface, low fees, and extensive selection of trading pairs contributed to its rapid rise as one of the world's most popular decentralized exchanges. By 2021, its daily trading volume exceeded $1 billion.

In 2020, Uniswap introduced the UNI token, serving as a governance token for protocol-related decision-making through voting by token holders. Additionally, UNI holders have the opportunity to stake their tokens to earn rewards.

While Uniswap continues to evolve, it has already achieved significant milestones and is poised to become a dominant force among decentralized exchanges. Here is a timeline summarizing key events in Uniswap's history:

  • 2018: Uniswap is founded by Hayden Adams.
  • 2018: The inaugural version of Uniswap is launched.
  • 2019: Uniswap V2 is introduced.
  • 2020: The UNI token is introduced.
  • 2021: Uniswap attains a daily trading volume surpassing $1 billion.

Conclusion

Uniswap (UNI) has firmly established itself as a trailblazer in the world of decentralized finance. Its innovative AMM model, user-friendly interface, and governance structure have made it a cornerstone of DeFi and a catalyst for the broader adoption of blockchain technology. As the cryptocurrency landscape continues to evolve, Uniswap remains at the forefront, shaping the future of decentralized exchanges and financial services.

How to buy the best cryptos now:

With Normal, you can instantly invest in perfectly diversified crypto portfolios like the Top 10, Top 30, AI/Data Index and beyond in just a few seconds.

Simply connect your favorite crypto exchange (or create an account - we’ll help with this), select a portfolio you like, and invest!

Using Normal to invest in crypto saves a ton of time and money on the fees you’d traditionally pay.

So if you’d like to help us secure crypto’s decentralized future and invest in markets with ease, head on over to https://app.normalfinance.io/ and get started today!

Sources

‍

Uniswap (UNI): Decentralized Finance's Gateway to Liquidity

Uniswap operates as a decentralized exchange (DEX), enabling users to engage in cryptocurrency trading without the involvement of a central authority.