- Uniswap is a decentralized exchange platform running on Ethereum blockchain.
- It has its token named UNI Token which powers the platform.
Uniswap (UNI) is one of the largest decentralized exchanges which allows users to trade cryptocurrencies. The platform runs on Ethereum blockchain and uses smart contracts to execute transactions. It can support the exchange of any digital token which is based on Ethereum token standard known as ERC-20. It is an open-source, secure and transparent platform which allows users to swap their tokens without any centralized authority.
Uniswap surpasses over $1.5 Trillion transactions. This makes it the most used platform based on Ethereum. With this remark, it has become the world’s largest on chain trading platform.
Uniswap creates liquidity pools which provide liquidity across the platform. A Liquidity pool is a pool of capital that is used to provide liquidity to a market. Investors can also earn revenue by staking their tokens in liquidity pools.By using liquidity pools, Uniswap allows its users to swap their tokens securely and seamlessly.
History of Uniswap
Uniwap was founded by an Ethereum developer named Hayden Adams. The first version (v1) of Uniswap was launched on the Ethereum mainnet in November of 2018. enables the trading of ERC-20 tokens. Moreover, after 18 months, in May 2020, Version 2 (v2) was released. The v2 introduces several helpful features like ERC-20 pairs, flash swaps, and price oracles. After one year, May 2021, the third version (v3) was released. It is a major upgrade in the history of Uniswap and it comes with some remarkable features like concentrated liquidity, better infrastructure and many more.
How does Uniswap work?
Uniswap takes advantage of the smart contracts which are deployed on the Ethereum blockchains to execute the exchange. Moreover, Uniswap uses the technology called Automated Market Maker (AMM), which is a type of algorithm that sets price automatically by creating an equilibrium based on the supply and demand of a market.This helps in determining prices and executes the trade.
Uniswap (UNI) Token
The native utility token of Uniswap is UNI. The token powers the ecosystem of the platform and is used for voting on governance proposals. UNI token holders can decide whether to add new features to the platform or to change the fee structure.UNI Tokens were launched in September 2020 via an airdrop. According to CoinMarketCap (CMC), the token is currently ranked 23rd and has a total supply of 1 Billion.
Advantages of Uniswap
- It is a decentralized exchange.
- It uses smart contracts which makes it cheaper and cost-efficient .
- Anyone can participate in the exchange as the platform is open source.
Disadvantages of Uniwap
- It only supports the exchange of ERC-20 tokens which makes its usage limited.
- While the platform charges low fees, one has to pay Ethereum’s gas fees which makes the exchange indirectly expensive.
- In Spite of its decentralized nature, it doesn’t have a large user base in comparison to centralized exchanges.
- As there is no central authority, there is a risk of impermanent loss.
Uniswap has made a remarkable change in the world of technology by making a decentralized exchange platform. Also, the platform is consistently working on its shortcomings to provide the users a better experience. As the adoption of Web3 increases, we will see furthermore decentralized exchanges to disrupt the crypto sector.
The analysis is done for providing information through technical analysis and no investment suggestions are given in the article to be made by investors. The stocks need proper study. So investors should have proper knowledge. Stocks are preferred more than the cryptocurrencies. The stocks are very safe for investment purposes.