What is Uniswap (UNI)? A Complete Guide
With literally thousands of cryptocurrency tokens to choose from, the marketplace can seem a bit confusing to outsiders. Though the biggest names like Bitcoin and Ethereum are well-known, there are very valuable tokens available now that could be big players in the near future.
Pundits and experts are watching, attempting to make a Uniswap price prediction and gauge the potential of this decentralized exchange existing on the Ethereum blockchain. What is the potential of UNI and Uniswap, as a whole? In this guide, we will discuss what Uniswap is, its foundation, what makes it unique, and so much more.
What is Uniswap (UNI)?
The short answer is that Uniswap is a decentralized exchange protocol existing within the Ethereum blockchain. To get a bit more specific, Uniswap is an automated liquidity protocol. There is no centralized party or order book involved. The contracts built into the protocol makes Uniswap capable of allowing users to trade without the use of an intermediary, facilitating resistance to censorship and a high level of decentralization.
Uniswap relies on liquidity providers. These providers create liquidity pools, which allow users to swap virtually any and all ERC-20 tokens on the Ethereum network. Even better, there is no need for an order book. Because the protocol is totally decentralized, Uniswap has no real listing process. Any ERC-token can be launched so long as it has a liquidity pool available, which means there are no listing fees charged. For smaller or new projects, this feature is infinitely valuable.
Who are the Founders of Uniswap (UNI)?
Unlike other organizations, Uniswap was founded by a single person. First released in 2018, Uniswap is the creation of founder Hayden Adams. A former mechanical engineer at Siemens, Adams is currently the CEO of Uniswap Labs.
Adams did not have prior experience in software development or blockchain technology previously, but did manage to teach himself. The work he has done with Uniswap has led to major growth in the decentralized finance market, mostly because of the Automated Market Maker (AMM) model. Uniswap continues to be a focal player in the DeFi space.
What Makes Uniswap (UNI) Unique?
At the heart of any valuable exchange comes a list of reasons that make the platform vital. Uniswap has a number of unique traits that help it stand apart, making it an investment to watch.
Liquidity Pools
One of the core tenants of Uniswap is its liquidity pools. Users have the ability to contribute to these pools by depositing tokens, which then earn them fees on any trades that take place within those pools. Because of this, fees are much lower than your average exchange.
These liquidity pools are a focal part of Uniswap’s core AMM model, which ultimately provides the necessary tokens required for making swaps. Any fees earned through the liquidity providers are then proportionally distributed their share of the overall pool.
Automated Market Maker (AMM)
Perhaps the most unique aspect of Uniswap is its AMMs. These are basically smart contracts that work to govern and control the liquidity pools. Rather than matching sellers and buyers, AMMs make use of algorithms in order to calculate prices based on the overall supply and demand of tokens within those liquidity pools.
AMM technology was a groundbreaker for Uniswap and continues to be a pillar of its platform. Through the use of AMM, Uniswap essentially has 24/7 accessibility and trading, even for the less popular tokens trading within the liquidity pools.
As it stands, liquidity providers earn 0.3% of each trade performed within the liquidity pools. Since the launch of Uniswap v2, it has been considered that a portion of trading fees could go toward the development of Uniswap v3 in the foreseeable future.
Smart Contracts
In order to properly manage the liquidity pools, Uniswap relies on smart contracts to provide secure automation. These smart contracts provide security and transparency for users. This is, in large part, because smart contracts on the Uniswap platform are verifiable and immutable.
These smart contracts are also vital because they provide trade settlements that are nearly instantaneous. With fast transaction feeds, the platform is capable of handling large trading volumes without experience any setbacks or stutters. Given the 24/7 nature of the platform, these smart contracts are vital.
How Many Uniswap (UNI) Coins are There in Circulation?
When it was created and released in 2018, Uniswap did not have a native coin. That came to be in 2020 with the release of the UNI token. With a total supply of 1 billion UNI tokens, we have yet to see all of them released into the marketplace.
Currently, there are 600.483 million UNI tokens in circulation. With just north of 60% of the maximum supply in circulation, experts believe that the price of Uniswap will grow as the total supply is slowly leaked into circulation.
How is the Uniswap Network Secured?
Uniswap features a decentralized protocol meant for swaps or trades with the UNI token being the exchange’s native token. Using the UNI governance token, which is an ERC-20 token, the network can secure projects meant for the future development of the platform.
Essentially, Uniswap works on a decentralized voting system. The process ensures that bad actors can’t propose and enact development upgrades that could compromise the security or reputation of Uniswap. Any trades performed on the platform are secured by the smart contracts within, making it possible for users to execute a trade without needing any kind of central authority.
Uniswap Ecosystem
The Uniswap ecosystem, as a whole, is a decentralized marketplace. Users are able to trade, buy, sell, and manage their digital assets, mostly ERC-20 tokens right there on the Ethereum blockchain. There are three main players within the Uniswap ecosystem:
Liquidity providers. These users contribute to the liquidity pool by adding tokens. Doing so earns them a share of any trading fees that are generated by those liquidity pools.
Traders. Users are also able to swap tokens so long as they are within the liquidity pool. There is a fee, but it is just 0.30% per transaction. The low fees are a major selling point compared to major exchanges.
Developers. There is also a platform within Uniswap that allows developers to build new interfaces and applications capable of interacting with the marketplace’s smart contracts. This, in turn, expands the potential use cases and overall functionality of Uniswap.
FAQs
What is Uniswap DAO?
The consensus protocol that governs Uniswap is Uniswap DAO. A decentralized autonomous organization (DAO) is popular on the decentralized exchange. Holders of UNI tokens get to vote on decisions and proposals as it pertains to the direction and development of the platform. Think of DAO as essentially the governing body for Uniswap. This ensures that Uniswap will continue to develop, evolve, and operate through a community-driven, decentralized approach.
What is the history of Uniswap?
Founded by Hayden Adams, Uniswap was initially released back in 2018. By 2020, Uniswap v2 was launched. This launch enabled direct swaps between virtually any ERC-20 token within the Ethereum blockchain.
An important milestone was achieved in September 2020 when Uniswap’s native token, UNI, was launched. The initial launch included an airdrop of 400 UNI tokens to those ETH addresses that had completed a transaction within the Ethereum network prior to September 1st. Some users got more based on how much liquidity they had previously provided to the Uniswap protocol.
Since then, Uniswap has grown to become one of the largest cryptocurrency exchanges in the market place. It has achieved a market cap of more than $3 billion USD and has been on a steady upward trajectory in recent years.
Why Uniswap acquired NFT aggregator Genie?
Uniswap made huge news by announcing that it has acquired NFT marketplace aggregator Genie. This is a move by Uniswap, a decentralized finance exchange, to move into the non-fungible token (NFT) space. Genie currently provides users with access to a library of NFTs across different marketplaces and makes them available quickly and conveniently.
Uniswap is making the move to not only add NFT aggregation to its marketplace, but to make diversification of NFT marketplaces a goal. Uniswap is making a calculated move given the questionable nature of the NFT market and trading volumes, Uniswap is getting in at a strategically strong point.
What is an Automated Market Maker (AMM)?
Automated Market Makers (AMMs) are a piece of the decentralized finance (DeFi) ecosystem. AMMs enable automatic, permissionless trading when it comes to digital assets. AMMs use liquidity pools and feature a constant mathematical formula that determines prices. With continuous accessibility, decentralization, and liquidity, AMMs like Uniswap have made them a preferable choice when it comes to trading for a relatively wide range of assets.
What is the highest and lowest price for Uniswap (UNI)?
Uniswap’s price history is a good indicator of its potential. Back on May 2, 2021, Uniswap hit an all-time high of $45.02. Given that its most recent price is around $6, that represents a -87% shift in value. That said, the all-time low valuation of UNI tokens was $1.03, so it is a positive note that UNI trades for nearly six times as much as its low.
What is the market cap of Uniswap (UNI)?
Though market valuation of Uniswap changes throughout the average trading day, we can determine market cap easily. This involves taking the current market price of each token and multiplying by the total circulating supply of tokens. With that said, the current market cap of Uniswap is roughly $3.747 billion USD. Uniswap has been hovering around $6 per token, so the market cap will shift as prices rise or fall.
What is the fully diluted valuation of Uniswap (UNI)?
In order to calculate the fully diluted valuation of a token, you must take the current market value per token and multiply it by the total maximum supply of tokens. The max supply of Uniswap is 1 billion UNI, which puts the fully diluted valuation of Uniswap at roughly $6.24 billion USD. That can change not only as market price shifts, but as more tokens are released into the circulating supply.
What is UNI’s price prediction?
Currently, Uniswap is trading at around $5.95 per token. Investors are looking toward the future and speculate on what its future price could look like. Experts anticipate that it could surpass the $7 mark by the end of 2025. That said, the five-year trajectory is perhaps the most interesting. Experts have Uniswap cracking the $100 mark in early 2030 if the token continues on its current trajectory.
What affects the Uniswap price?
Uniswap, like other forms of crypto assets, is subject to a variety of factors that impact its price. Market sentiment will always play a role, as will any fundamental or technical developments. Inflows and outflows, the news cycles, and the general economic environment play a role as well. Additionally, any developments in governance will play a role in Uniswap’s price as well.
Is it safe to invest in Uniswap?
Unlike many other crypto assets, Uniswap is considered to be a safer investment for a couple of reasons. For starters, it is only controlled by a single company so there won’t be battles over the direction of the asset. Secondly, it runs on the Ethereum blockchain, so there is stability on that front. Finally, it is one of the biggest DeFi platforms out there with more than $3 billion in total assets.
