Uniswap

What is Uniswap? 

• Uniswap is a decentralized exchange protocol that operates on the Ethereum blockchain.
• Uniswap platform enables peer-to-peer (P2P) trades that execute without order books or an intermediary. Moreover, the platform achieves this with a liquidity pool model that uses automated smart contracts that enable prospective traders access to competing user-funded token reserves.
• Token Lists is a new standard for creating lists of ERC20 tokens. This is a community-led initiative to improve discoverability and trust in ERC20 token lists in a manner that is inclusive, transparent, and decentralized.
• The Uniswap protocol is a major player among decentralized exchanges and is one of the driving forces behind the growth of DeFi. Uniswap’s recently issued UNI governance token builds upon the  principle of community self-sufficiency by enabling stakeholder involvement in protocol decision making.

Uniswap launched in November 2018 and, with the DeFi phenomenon and associated surge in token trading, it has gained considerable popularity since then.

Key Metrics

Ticker	UNI
Token Name	Uniswap
Token Type/Protocol	ERC-20
Total Token Supply	1,000,000,000
Current Circulating Supply	See Coinmarketcap
Market Capitalisation	See Coinmarketcap
Token Creation Date	November 2, 2018
Can it be mined?	No

Who is behind Uniswap? 

Uniswap’s creator is Ethereum developer Hayden Adams. Adams mentioned that the original inspiration for the Uniswap platform came from one of Buterin (Ethereum creator)’s own blog posts. His original idea to focus on Ethereum came after he was convinced to begin researching and understanding the protocol in 2017.

What is the purpose of Uniswap?

Uniswap’s purpose is to keep token trading automated and completely open to token holders, while improving the efficiency of trading versus that on traditional exchanges, creating more efficiency by solving liquidity issues with automated solutions, avoiding the problems which plagued the first decentralized exchanges.

Insights:

• When users trade with a Uniswap liquidity pool, a transaction fee of 0.3% is charged. This fee is distributed pro-rata to all LPs in the pool.
• UNI is a native governance token that facilitates greater community involvement and oversight. UNI holders can vote on Uniswap project developments that will determine the platform’s trajectory as it evolves. UNI holders can also fund liquidity mining pools, grants, partnerships, and other growth-driven initiatives that expand Uniswap’s reach.
• In September 2020, Uniswap went a step further by creating and awarding i UNI to past users of the protocol. This added both profitability potential and the ability for users to shape its future — an attractive aspect of decentralized entities.
• Founder of Uniswap Hayden Adams invented the particular implementation of the formula on Uniswap, X x Y = K, the formula used to automate the exchange.
• The protocol manages activity by limiting risk and reducing costs for all parties, by automating the process of market making, the mechanism also removes identity requirements for users, and technically anyone can create a liquidity pool for any pair of tokens.

Risks:

• There’s a perpetual 2% yearly inflation rate which means the supply of UNI tokens will constantly increase to ensure continued participation and contribution to Uniswap at the expense of passive UNI holders.
• Uniswap doesn’t offer a cut of the fees to token holders while the other coins, i.e., Sushiswap, do.
• Voting might not decide the direction that the majority of the holders requests for even though the initial token allocation chart seems fair as 60% goes to the community as only 17% was for the initial airdrop and liquidity mining program. Furthermore, treasury, controlled by token holders collectively including the team and early investors, holds the rest allowing them to have more power than the community.

News and Updates:

• Flipside Crypto, a community-driven data analytics firm focused on crypto, has requested a $25 million grant from Uniswap to finance its activity over the next two years.
• Uniswap has typically commanded the most in daily transaction fees, a key barometer for actual usage of the world’s second-largest blockchain. The resurgence of NFTs, however, has helped put OpenSea in the top spot with over $1.9 million in gas spent on transaction fees in the past day. By comparison, a combined $1.57 million in transaction fees has been spent on Uniswap V2 and V3.

Community & Whitepaper Links:

Official Website: https://uniswap.org/blog/uni/
White Paper: https://uniswap.org/whitepaper.pdf

Disclaimer  

All investments are speculative and involve substantial risk and uncertainty. Investors should understand the nature of digital assets including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment.