Uniswap: everything you need to know about UNI

What is Uniswap?

Uniswap is a decentralized cryptocurrency exchange (DEX) that utilizes smart contracts on the Ethereum blockchain. These smart contracts power a system known as "automated market making," eliminating the need for a central intermediary and enabling the trading of tokens without an order book.

The platform doesn't require user account registration or verification, making it accessible and user-friendly for anyone with an Ethereum wallet.

The UNI token is designed to reward platform users and involve them in the decision-making process. Uniswap offers a wide range of ERC-20 tokens and stablecoins, making it an attractive option for those interested in trading less-known tokens.

How does Uniswap work?

Uniswap operates based on automated market making, meaning the platform uses an algorithm to match the supply and demand of tokens. This allows tokens to be traded without the presence of an order book.

To trade on Uniswap, users deposit tokens into liquidity pools, which become available for trading. When a sell order is placed, it is automatically executed by Uniswap's algorithm. The token prices are dynamically adjusted based on the demand and supply within the liquidity pool.

Uniswap generates revenue by charging a small fee on each trade that occurs on the platform. These fees are distributed to platform users in the form of UNI tokens.

The UNI token

Users can earn UNI tokens by providing liquidity to the liquidity pools on the platform. This action increases the platform's liquidity, and liquidity providers receive a portion of the trading fees collected on the platform.

The UNI token is also designed to enable participants to have a say in important decisions regarding the platform's direction and future. This means that holders of UNI tokens can influence the platform's development.

The UNI token is tradable on exchanges, allowing token holders to sell or trade it for other tokens at any time.

The Technology Behind UNI

Uniswap is built on the Ethereum blockchain and uses smart contracts for automated market making. The platform consists of two main components: Liquidity Pools and the Automated Market Maker (AMM) algorithm.

Liquidity Pools are collections of tokens deposited by users, which are traded based on supply and demand. The pool's liquidity is dynamically adjusted based on buy and sell orders.

The AMM algorithm determines token prices based on the quantities of each token in the liquidity pool. It recalculates prices with each buy or sell order, meaning that token prices on Uniswap change in real-time based on supply and demand.

Uniswap utilizes the Ethereum blockchain as its underlying infrastructure, ensuring that all trading and transaction data on the platform is decentralized. Uniswap's smart contracts are open source, allowing anyone to view and improve them.

The entire technical architecture of Uniswap is geared towards decentralized automated market making, making the platform user-friendly and providing access to a wide range of tokens.

The Uniswap Ecosystem

The Uniswap ecosystem revolves around five key components:

• Decentralized Exchange (DEX)
• Liquidity Pools
• Smart contracts
• The UNI token
• Users

At the core of the system is the Decentralized Exchange (DEX), where users can trade tokens without the need for a central intermediary. Liquidity Pools are where users provide liquidity to the platform in exchange for a share of the trading fees. Smart contracts enable automated market making and allow users to provide liquidity to the platform.

The UNI token is designed to reward users for their contributions to the platform and involve them in the decision-making process. Finally, there are the users themselves, individuals and businesses using the decentralized exchange to trade tokens and provide liquidity to the platform.

Benefits of Uniswap

What are the advantages that make Uniswap an enticing platform?

• Highly accessible and user-friendly, with no account requirements.
• Offers a wide range of tradable ERC-20 tokens.
• Puts users at the center and is community-focused.
• Provides diverse investment and trading opportunities.
• Compatible with an Ethereum wallet.

Drawbacks of Uniswap

Despite its appeal, Uniswap is not without its downsides. What are the disadvantages of UNI?

• Access without accounts means a lack of regulation, resulting in higher security risks.
• Higher price volatility due to real-time price changes instead of a centralized order book.
• Offers fewer features compared to traditional exchanges.

Who is the founder of Uniswap?

The founder and CEO of Uniswap is Hayden Adams. Before Uniswap, he worked as an engineer at Siemens. He graduated from Stony Brook University in 2016 with a bachelor's degree in engineering. Now, he serves as CEO and developer with a focus on developing Uniswap as a decentralized exchange on the Ethereum blockchain.

Price forecasts

In 2026 experts expect a minimal price of €26.05 and a minimal price of €86.10 in 2031.