What is Uniswap (UNI)?

What is Uniswap (UNI)?

What is Uniswap?



Uniswap is a decentralized financial platform that has grown in popularity due to its “Liquidity Pool” system. UNI enables buyers and sellers to exchange ERC20-compliant tokens in  an automated manner. There is no need to place orders because Uniswap operates on the Ethereum blockchain through smart contracts.



Team of developers

Hayden Adams created Uniswap, which was inspired by Ethereum co-founder Vitalik Buterin. He aimed to build a platform that allows users with crypto wallets to easily swap the ERS-20 tokens on the platform such as ETH, OMG, USDT, USDC, UNI, and so on for a charge of 0.3% of the exchange value by paying in ETH.



Interesting Technology



At Uniswap, an intriguing invention is the “Automated Market Maker (AMM)” or Smart Contract. It can aid in the automation of transactions when certain conditions are met, as well as the automatic adjustment of market balance.



The AMM system differs from the Order Book system on the Centralized Exchange (CEX) platform in that the Order Book system needs to determine the purchasing or selling price.



For the AMM system, investors are not required to set trading prices. The system will calculate the price at that time in accordance with the balancing concept (Rebalance). This is to compute the price of money that links two currencies together, resulting in a constant value regardless of how many trades are executed.



Furthermore, the key mechanism that produces Uniswap liquidity are investors who offer liquidity to the system, known as a “Liquidity Provider”, who deposit two linked currencies of equal value into a liquidity pool, for example ETH-UNI or ETH-USDT. When users swap tokens on Uniswap, the system retrieves the coins from the pool and the users are required to pay a pool fee. These fees will be distributed proportionately to liquidity providers (LPs) based on their deposits in the pool.



Uniswap differs from typical exchanges in this regard by allowing users to share directly in the profits created by its services.



Interesting point

1. Uniswap is a platform that is consistently enhancing its services by focusing on the user (User-centric) shown through its governance tokens, wherein token holders will be able to vote on the platform’s growth plans. By contributing liquidity to the system, users will get UNI tokens. Alternatively, it may be obtained from the period in which Uniswap provides free tokens to users, such as in 2020, when users receive 400 tokens, or around 46,000 baht.

2. Anyone using digital currencies in a digital wallet can use Uniswap without giving personal information to validate identification or KYC, only by possessing digital currencies in  a digital wallet. On Uniswap, one may begin trading instantly, whereas centralized exchanges take some time to prove their identification before they can utilize their services. 3. Uniswap is a very secure platform. Due to the network’s open source nature, anyone may develop their own decentralized exchange platform by coping with system code from Uniswap, such as Sushiswap, Pancakeswap, or by adding tokens to the network for free. This implies that it has been validated by a large number of developers in the crypto sector. And, users on Uniswap have complete control over their private keys and crypto wallets. As a result, the danger of currency theft and system attack is low.





In reference to statistics from Coinmarketcap on October 22, 2021, UNI is ranked as the 12th highest in terms of market capitalization, with around 16 billion U.S. dollars or around 5.42 billion Thai baht. UNI’s maximum supply is fixed at 1,000,000,000 UNI with a current 611,643,723.83 UNI in circulation. 



Additionally, UNI once made an all-time high at 1,525 baht and is hovering around the price of 886 baht at the time of writing.





Conclusion



Uniswap is a decentralized exchange platform that provides liquidity for swapping two pairing currencies. It also lets users maintain ownership of their assets and offers liquidity providers a share of fees. So, Uniswap has attracted significant investor interest.



Although Uniswap is secure due to its usage of smart contracts. However, this does not imply there is no possibility of being attacked. Numerous DeFi were attacked in the world of Decentralized Finance (DeFi). Before making an investment decision, investors are highly advised to conduct thorough research.



Reference:

CoindeskBlockchain ReviewBitkub, MVPworkshopBinance AcademyCoinmarketcap Trading Education

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