Uniswap is a decentralized exchange (DEX) running on the Ethereum blockchain. Based on smart contracts, users can swap between different cryptocurrencies without any involvement from a centralized part.
The biggest difference compared to a centralized exchange is that Uniswap uses liquidity pools and AMM (Automated Market Maker) to set the exchange rate. In addition, there is never an exchange for fiat. All integration with the decentralized exchange needs to be with, for example, MetaMask or WalletConnect.
UNI Token (UNI) is Uniswap’s governance token. This means that those who hold UNI can participate and vote for proposals on how to improve the protocol. The more UNI a person holds, the more votes the person is eligible for. This creates decentralized control over the platform. Voting can for example take place on which blockchains to integrate, fee levels as well as which liquidity pools should provide extra rewards in UNI.
After Uniswap was launched, several similar decentralized exchanges, with the same technical structure, have been created. These include, for example, PancakeSwap, QuickSwap and SushiSwap. What differs between them is primarily which blockchains they can interact with but also user friendliness and additional functions apart from the exchange of cryptocurrencies. As of 2022, Uniswap interacts with Ethereum, Polygon, Optimism, Arbitrum and Celo. Thus, the service focuses on the Ethereum ecosystem.
The price of UNI is determined solely by the supply and demand of the cryptocurrency. UNI was launched through an airdrop in September 2020. Everyone who had completed a transaction with Uniswap before 1 September 2020, automatically got 400 UNI to their Ethereum wallet address.
This meant that 60% of the total supply of 1 000 000 000 UNI, was issued via airdrop. The remaining 40% is distributed through a four-year period from launch to those who add liquidity to specific liquidity pools on Uniswap. After that, UNI will have annual inflation (increased number of coins) of 2%.
Get started with 3 easy steps:
Uniswap V2 white paper: https://uniswap.org/whitepaper.pdf (march 2020)
Uniswap V3 white paper: https://uniswap.org/whitepaper-v3.pdf (march 2021)
Uniswap website: https://uniswap.org/
Uniswap DEX: https://app.uniswap.org/