Uniswap is a decentralized exchange (DEX) that utilizes an automated market maker system with liquidity pools. Uniswap exchange lets users trade between assets that run on the Ethereum blockchain (Ether and ERC-20 tokens). Uniswap has its own ERC-20 token operating under the ticker UNI. Within the Uniswap ecosystem, UNI acts as a reward and governance token.
Uniswap creator Hayden Adams launched version one (v1) of the platform in November 2018 during the 2018 crypto bear market that followed the notable 2017 and early 2018 digital asset bull run.
Uniswap gained a significant following in 2020 amid a year when decentralized finance (DeFi) took the crypto market by storm. DEXs exist as part of the DeFi niche. Uniswap v2 went live in May of 2020.
In September 2020, the platform’s ERC-20 token launched in tandem with an airdrop that gave UNI tokens to various market players, such as 400 tokens for any user who used Uniswap exchange prior to Sept. 1 of that year. Uniswap v3 went live in May 2021.
At its simplest, the Uniswap decentralized exchange lets users trade ETH or ERC-20 tokens without an intermediary. Built on the Ethereum blockchain, the Uniswap DEX comprises liquidity pools (smart contracts on the Ethereum blockchain) that hold pairs of assets. When users trade on the Uniswap platform’s interface — its frontend — they trade one asset for another, interacting with a relevant pool on the backend.
These pools gain liquidity when entities lend their assets to a pool. Such lenders then earn a percentage of the platform’s fees, paid by the trader when they complete a trade. Such fees are dispersed to the related pool’s liquidity providers (lenders) in accordance with the amount each player lent to the pool.
Uniswap charges its trading fee to incentivize liquidity providers, although other ETH fees, paid to the Ethereum blockchain, are also required because trades on Uniswap exchange happen through the Ethereum blockchain.
The Uniswap project comprises several components. Uniswap’s DEX and interface were constructed by a company called Uniswap Labs. The Uniswap DEX is referred to as the Uniswap Protocol. The main web page participants can visit to use the Uniswap DEX is known as the Uniswap Interface, and Uniswap Governance refers to the way in which UNI holders dictate the future of the project through voting.
Uniswap’s token UNI
UNI, Uniswap token, which is a token, not a coin, acts as a governance token in Uniswap’s system. UNI holders dictate the project’s path forward, voting on changes. The Uniswap crypto asset hosts volatility similar to other crypto assets. Uniswap’s price today via its token is shown above in the live UNI token price at the top of this page, above the UNI price chart.