Uniswap (UNI) is an Ethereum token that is intended to power the Uniswap automated liquidity provider for Ethereum (ERC-20) tokens.
On Uniswap, traders can exchange Ethereum tokens without needing to trust anyone. Anyone can lend their crypto to special reserves, known as liquidity pools, and when they provide money to these pools, they can earn fees. Different smart contracts will enable different use-cases for the liquidity pools, and the constant market maker algorithm which is utilized ensures a constant supply of liquidity.
Uniswap is one of the most popular decentralized exchanges on the Ethereum network. With a total value locked of $2.7 billion, the token allows anybody to swap ERC-20 without finding a seller or a buyer on the other end.
Uniswap eradicates the conventional order book model. It has made way for an automated market marker protocol that allows the users to trade with an efficient smart contract known as a liquidity pool. This approach is useful as it offers open access. Anybody can easily swap or add tokens to a pool. It helps in earning fees or listing a token on Uniswap.
UNI came into existence to solve some of the critical problems in the market. Since it has a decentralized nature, it helps eliminate control and power accumulated by famous exchanges like Coinbase and Binance. Additionally, Uniswap plays a crucial role in offering new businesses access to global liquidity.
Uniswap gained prominence mainly due to its simplistic interface and open nature. Besides, the trading window is quite essential. Secondly, it does not have any central authority that blocks users and snatches their funds. Access is equal, and it truly captures the core of decentralization.
UNI is the native token of this protocol. It entitles the holders to fundamental governance rights. The UNI holders will be able to vote on changes to the Uniswap protocol. Furthermore, the holders can fund grants, liquidity mining pools, partnerships, and different proposals. Soon enough, the Uniswap team will not be involved directly. The uniqueness of UNI tokens is that the holders will soon make all the governance decisions.
The users do not have to deposit the crypto funds or undergo the KYC procedure. In a situation where you need to make the deposit, the documents and funds could get hacked. That’s because hackers tend to break into CEX (Centralized Exchange) often. Uniswap has never experienced such misfortune. Thanks to its protocol.
Uniswap has proved that one can launch a Decentralized Finance protocol without having a million-dollar ICO launch. In 2018, founder Hayden Adams aimed to clean up the messy user interface of EtherDelta. Moreover, EtherDelta was a reigning decentralized exchange in 2018. Adams learned to build a decentralized liquidity market and coding. He did not create a lot of hype around it. Uniswap came into existence behind closed doors, and there was no need for funding and fanfare.
In the year 2020, Uniswap came up with a governance token called ‘UNI.’ There was no token sale, and the company did not even run an ICO.
Investors can purchase UNI tokens from various exchanges, including Bitfinex, Gemini, Binance, Huobi, Kucoin, and Uniswap. Despite it being new to the crypto world, it has gained rapid success. After the launch, it took a few weeks to reach the top 50 coin listing.
In the beginning, decentralized exchanges like Ubuswap struggled to search for the best ‘price discovery’ engines. The authentic version relied on arbitrageurs for price discovery purposes. However, the latest version has done away with this model. It uses advanced oracles for price discovery.
Many DEXs have imitated the strategies developed by UNISWAP. Despite this imitation, UNI continues to be a trusted token for all users. It will continue to hold significant value in the future.
UNI airdropped 400 UNI tokens to thousands of users in 2020. It gave rise to a deep excitement among crypto enthusiasts, but it also caught a bullish impetus.
Uniswap’s user base shall grow in the coming years. The current price is \(6.3, making it one of the best performers in the market. As long as the price goes above \)5, it will remain in the famous bull market.
Since there was a massive jump in such a short period, the correction phase will be arriving shortly. When this correction phase enters the scene, it might have a negative influence.