Uniswap is a decentralized trading protocol that has become popular for its role in facilitating the automated trading of Decentralized Finance (DeFi) tokens.
The Uniswap protocol is a great example of an Automated Market Maker (AMM). It was launched in November 2018 but gained popularity in 2020 thanks to the Decentralized Finance phenomenon and the associated surge in token trading.
Uniswap strives to ensure that token trading is automated and completely open to everyone. In doing so, it will increase the efficiency of trading compared to traditional exchanges.
Uniswap evolves efficiency by addressing liquidity issues with automated solutions and avoiding the problems that plagued the first decentralized exchanges.
In September 2020, Uniswap went even further by creating a governance token, UNI, and rewarding the protocol’s veterans. It added both the potential for profitability and the ability for users to influence the future of the platform. It is an important and attractive aspect of decentralized organizations.
Who created Uniswap?
Uniswap originated as a blueprint to introduce AMM on Ethereum to a wide audience. The platform was created by Ethereum developer Hayden Adams.
Adams has worked on various projects while finalizing Uniswap. His work was directly influenced by the creator of Ethereum Vitaly Buterin. Buterin even came up with a name for the protocol: it was originally known as Unipeg.
Adams also said that a post on Buterin’s blog prompted him to create the Uniswap platform. The idea to focus on Ethereum came after a friend convinced him in 2017 to do research and start understanding the protocol.
What is unique about Uniswap?
Uniswap exists to create liquidity and value for the DeFi space through trading.
The protocol operates using the formula for automatic exchange: X * Y = K. It has become one of the main automatic market makers currently in operation. Hayden Adams describes himself as the inventor of a specific implementation of the formula in Uniswap.
Uniswap is not just a decentralized exchange; it is trying to solve the liquidity problems faced by platforms like EtherDelta.
By automating the market-making process, the protocol stimulates activity, limiting risk, and cutting costs for all parties. This mechanism also removes authentication requirements for users. Technically, any user can create a liquidity pool for any pair of coins.
According to Uniswap, the governance token (UNI) was created to formalize that Uniswap is a user-owned and self-contained infrastructure while continuing to carefully protect its inviolable and autonomous qualities.
How many Uniswap (UNI) coins are in circulation?
The total volume of UNI, the Uniswap governance token, is 1 billion. They will be available within four years. After this, Uniswap will introduce a constant inflation rate of 2% to maintain the network.
Now the tokens are distributed as follows:
- 60% to members of the Uniswap community, that is, users;
- 21.51% to team members;
- 17.8% to investors;
- 0.69% to advisors.
The last three distributions will follow a four-year vesting schedule.
Only those who used Uniswap before September 1, 2020, can get 15% of the share allocated for transmission to users. It even includes users who submitted transactions that were not confirmed. They are entitled to 400 UNI.
How is the security of the Uniswap network ensured?
Uniswap is a decentralized protocol for trading, and the UNI token is an internal governance token. UNI is an ERC-20 token, which means it requires Ethereum to work.
ERC-20 simply defines a set of rules for tokens as well as security considerations mainly related to the power of the Ethereum network. For example, congestion can lead to an increase in the cost of the gas required to complete transactions, resulting in delays and abnormally high fees, affecting all participants.
Additionally, smart contracts can lead to security issues, which in turn can lead to loss of funds for DeFi traders. In fact, over the short lifespan of DeFi, hackers have already managed to steal millions of dollars.
Where to buy Uniswap (UNI)?
UNI governing coin is available on major exchanges in trading pairs with other cryptocurrencies, fiat money, stablecoins, and more.
These include Binance, OKEx, and Coinbase Pro, as well as, of course, the Uniswap protocol itself.
