Uniswap is an open-source decentralized exchange (DEX) that allows users to trade cryptocurrency assets and NFTs and provide liquidity. With Uniswap, it is possible to trade assets without the need for any intermediary or centralized organization. The native cryptocurrency of the Uniswap project is UNI. In this article, we will look for answers to questions such as what is Uniswap (UNI), what does it do and what are its advantages.
What is Uniswap (UNI)? What Does It Do?
Uniswap is an open source decentralized exchange (DEX) platform built on Ethereum. On this platform, trading and exchange of ERC-20 cryptocurrency assets on Ethereum can be carried out. These transactions are done through smart contracts. Similarly, NFT collections are also traded. In addition, thanks to the pooling system within Uniswap, users can lock their cryptocurrency assets to earn rewards as a liquidity provider. In this whole process, users do not need any intermediary or central organization.
In the Uniswap project, trading or clearing operations can be carried out directly on users’ wallets. This means that transactions do not need to be transferred to the exchange. Uniswap’s decentralization allows users to do this and helps the platform to become resilient against censorship. In addition, the decentralization of the Uniswap platform means that the listing processes on centralized exchanges are also left behind. As there are no listing fees charged, it could be an ideal marketplace for newly emerging or smaller ERC-20 projects.
On the Uniswap platform, prices in swap transactions are calculated based on the amount of cryptocurrencies in the pool, led by smart contracts. In exchange for the asset withdrawn from the user’s wallet during the swap, the cryptocurrency asset in the smart contract with which the swap is intended to be executed is transmitted to the other user.
Ahead of the launch, Uniswap gave away 400 UNI to everyone who traded on the network. This move by Uniswap has caused a great resonance in the cryptocurrency world. 400 UNI is not a small amount in dollar terms today.
UNI, the native cryptocurrency of the Uniswap project, is used to have a say in the management of the exchange, to carry out staking transactions and award rewards, to pay transaction fees, etc.
How Does Uniswap (UNI) Work?
Uniswap exists as an automated liquidity protocol supported by a fixed product formula and implemented in a system of smart contracts that cannot be upgraded on the Ethereum blockchain. It prioritizes decentralization, resistance to censorship and security by eliminating the need for trusted intermediaries. Uniswap is open source software licensed under the GPL.
Each Uniswap smart contract, or pair, manages a liquidity pool of two ERC-20 cryptocurrency reserves. To provide liquidity to a pool, a user needs to deposit equal value of both cryptocurrencies into the pool. Liquidity providers will receive Uniswap (LP) tokens for each liquidity they provide. These markers are used to help monitor the duration and amount of liquidity provided to the protocol. This ensures that liquidity providers receive their fair share of remuneration.
Pairs act as automatic market makers, ready to accept one cryptocurrency for another as long as the “fixed product” formula is maintained. Expressed in its simplest form as x * y = k, this formula states that transactions should not change the product (k) of a pair’s reserve balances (x and y). Since it remains unchanged with respect to the reference frame (k) of a process, it is often called invariant. This formula has the desirable property that larger transactions (relative to reserves) occur at exponentially worse rates than smaller transactions.
Uniswap applies a fee of 0.30% to transactions, which is added to reserves. As a result, each operation actually increases k. This serves as a payout to LPs when cryptocurrencies in the pool are burned to attract their share of the total reserves. In the future, there is a possibility that this fee could be reduced to 0.25% and the remaining 0.05% could be set aside as a protocol-wide fee.
Since the relative price of two pairs of crypto assets can only be exchanged through trading, differences between the Uniswap price and external prices may occur. This means that arbitrage opportunities arise.
What Advantages Does Uniswap (UNI) Offer?
Below are the advantages of Uniswap that enable it to play an important role in the DeFi space and provide various opportunities for users.
Decentralized Structure:
Uniswap enables both cryptocurrency trading and exchange and NFT trading directly between users without the need for a centralized intermediary. This allows users to protect and freely control their assets without depending on a central authority.
High Liquidity:
Uniswap uses a system called Automated Market Makers (AMM). As this system automatically determines the prices of cryptocurrencies deposited into liquidity pools, users can always find a liquid market.
Ease of Use:
Uniswap offers its users a practical interface and operating system to ensure an easy use. Users can trade or exchange on Uniswap using an Ethereum wallet. Uniswap also allows users to integrate with other applications using its own API.
Diversity:
Uniswap holds many Ethereum-based cryptocurrencies. This allows users to trade a wide range of cryptocurrencies. This also applies to liquidity providers.
Governance and Participation:
UNI, Uniswap’s native cryptocurrency, plays an active role in the governance of the platform. UNI holders can make decisions and vote on the future of the platform. In this way, users can contribute to the development of the platform. It is even planned to withdraw the Uniswap team from these decision-making processes after some time.
Ecosystem Integration:
Uniswap is an important part of the DeFi ecosystem and provides integration with DeFi protocols. This allows users to easily move assets between different platforms and access different financial services.
Low Transaction Costs:
Uniswap charges a small fee on each trade transaction and distributes this fee among all liquidity providers for that pool. Since trades are based on the AMM model, commissions for liquidity providers and traders do not reach high amounts.
Processing Speed:
The fact that Uniswap runs on the Ethereum blockchain means that it benefits from the speed of smart contracts. With developments on the Ethereum network, it is likely that Uniswap transactions will also accelerate.
Freedom of Content:
Uniswap allows any cryptocurrency to be listed. This allows cryptocurrency developers to easily open their projects for trading.
Security:
Uniswap allows users to hold cryptocurrency assets in their own wallet instead of on a centralized exchange. This increases the security of cryptocurrency assets held by users and also makes them more resistant to cyber-attacks.
Global Access:
Uniswap is a platform that anyone with an internet connection can access. Users located anywhere in the world can provide liquidity, trade or exchange, and enjoy the benefits of the platform.
Innovation and Development:
The open source nature of the Uniswap protocol encourages developers to create new features and applications. This can grow the ecosystem and open up more opportunities for users.
Who are the Founders of Uniswap (UNI)?
Uniswap was released in 2018 by Hayden Adams.
Hayden Adams is the founder of Uniswap. It is known that he has been interested in technology and finance from a young age. Hayden Adams graduated from Stony Brook University with a degree in Engineering. During his college years, he developed an affinity for computer science and finance and started looking for ways to use technology. Hayden Adams’ career history before Uniswap shows that he worked as an engineer at Siemens and as a researcher at Columbia University Health Center.
It is known that the plan of the Uniswap project was realized with a grant from the Ethereum Foundation.
What Other Things to Know About Uniswap (UNI)?
To find out a little more about Uniswap (UNI), it is useful to look at the answers to some of the following questions.
Is UNI a token? Or is it a coin?
Coin is a cryptocurrency created on its own blockchain. A token is a cryptocurrency that does not have its own blockchain and is created on an existing blockchain. UNI is a token because it does not have its own blockchain.
Which blockchain is UNI token on?
The UNI token was created on the Ethereum blockchain in accordance with the ERC-20 standard.
Is UNI token mining done?
UNI is not mined. However, users who stake cryptocurrency assets are rewarded.
How to buy UNI tokens?
To buy UNI tokens, it is sufficient to create a membership on ICRYPEX. Once the membership process is complete, it’s fast, easy and secure to trade UNI tokens and other cryptocurrencies.
How to Become a Member of ICRYPEX?
After visiting www.icrypex.com from a browser, you can click on the “SUBSCRIBE” button at the top right of the page, fill in the required information and you can easily create your membership.
From mobile devices, primarily;
Android users can download our app by clicking here, Apple users by clicking here and HUAWEI users by clicking here. After logging in to the application, you can click on the menu icon at the top left, then click on “SUBSCRIBE” to fill in the required information and easily create your membership.
