What is Uniswap (UNI)?

What is Uniswap (UNI)?

Share on facebook
Share on linkedin
Share on twitter
Share on pinterest
Share on email

 

Uniswap is one of the largest and most popular decentralized exchanges, also known as DEX, in the cryptocurrency market. Uniswap runs on the Ethereum blockchain and allows users to exchange different ERC-20 tokens using an Automatic Market Maker (AMM) protocol instead of the conventional spot market order book.

 

Component Uniswap (UNI)
Technologies Auto Market Maker Protocol
Market capitalization $13 Billion+
Open-Source Yes
Consensus Mechanism None
Smart Contracts Yes, binary smart contract system
Founders/Authors Hayden Adams
Launch Date 2018
Circulating Supply of Coins 627,823,667
Maximum Coin Supply 1,000,000,000 UNI
Mining-based Coin? No
Is Uniswap a Stablecoin? No
Does Uniswap have a burn rate? No
Does Uniswap have a Whitepaper? Yes, it can be viewed here.

 

Evolution and Development of Uniswap

Uniswap was publicly announced and deployed in 2018 on the mainnet of Ethereum as an ERC-20 project. Uniswap was created by Hayden Adams, who introduced the concept of Automated Market Making and developed Uniswap, with version 1 launching in 2018.

 

What makes Uniswap unique?

Uniswap is a DEX that uses AMM protocols to incentivize users who provide liquidity to the exchange through liquidity pools instead of matching buyers and sellers like other exchanges.

Liquidity providers lend their cryptocurrencies to AMM, allowing people to trade these assets in the open market. Liquidity providers are then paid interest and other rewards for providing liquidity on the exchange.

Liquidity pools on the exchange allow users to trade in and out of the pool using two different cryptocurrencies without needing a counterparty on the opposite side of the trade.

The AMM protocol that Uniswap uses relies on mathematical formulas to price assets accordingly instead of a conventional order book. AMMs are programmable intelligent contracts that keep the liquidity pools against which traders trade, with liquidity providers funding the liquidity pools.

 

What are the main uses for Uniswap?

Uniswap is a decentralized exchange where users can trade and exchange ERC-20 tokens. These tokens can be changed using compatible wallets. Uniswap facilitates trades using intelligent contracts known as Automated Market Maker protocols.

Some factors that users must consider when they operate on Uniswap relate to the following:

  • Slippage tolerance. Slippage refers to the difference between the expected price on the swap and the actual price at trade execution. Slippage tolerance, therefore, refers to the change in the price from the expected price that the trader accepts.
  • Transaction deadlines. Users can set their transaction deadlines in their Swap settings, indicating the maximum time users want to wait for the execution of the pending Swap.

 

Users who want to use Uniswap to provide liquidity and earn interest back on lending their cryptos can also use the exchange by connecting a compatible wallet on the platform. When users provide liquidity, they are rewarded 0.3% of all the trades in proportion to the allocated share that the user holds in the liquidity pool.

Once users add liquidity to a pool, they will receive liquidity tokens minted and transferred to the user’s wallet. They represent the user’s contribution to the collection, and they are distributed according to the user’s share in the collection.

 

What is the future potential for Uniswap?

Uniswap can become one of the largest decentralized exchanges in the cryptocurrency market because it uses innovative contract technology, constant developments, and improvements, and blockchain technology is seeing widespread adoption.

Uniswap offers innovative and practical features, including:

  • Token Swap
  • Liquidity pools
  • Flash Swaps
  • Oracles
  • Low transaction and service fees
  • A range of supported wallets
  • Anonymous trading without KYC
  • A user-friendly, innovative interface
  • Version 3 includes improved decentralization, better security, enhanced price oracles that seek out the best pricing, lower gas fees, the option for charging protocol fees, and more.

 

Price analysis on Uniswap

Uniswap was initially launched in 2018 but only displays price history from 2020 as follows:

  2020 2021 to date
UNI Price High $6.8 $43.16
UNI Price Low $1.9 $4.7
Market Cap $1.39B $22.57B

 

Price prediction on Uniswap

Uniswap has the following price predictions for 2021 and the future:

  • January 2022 – $44.57
  • December 2022 – $51.1
  • UNI is expected to reach an all-time high of $100 between 2023 and 2025.
  • By 2028, UNI is expected to trade at $124.

 

Which wallets are the best option for storing Uniswap?

Simply defined, an Uniswap wallet is a piece of software where users store the necessary data to access their Uniswap (UNI) funds. This data contains a private key, like a password, and a wallet address, also known as a public key, which acts as an account number.

In terms of the types of Uniswap wallets, users can distinguish between the following:

  • Cold Wallets – which are offline wallets that store funds in an application that is not connected to the internet.
  • Hot Wallets, which are online applications that require an internet connection.
  • Physical wallets are unique pieces of hardware like USB devices that keep crypto funds offline.
  • Web wallets are web browser ad-on wallets.
  • Desktop wallets – which are applications that allow users to manage their finds on macOS, Microsoft Windows, or Linux.
  • Paper wallets are a piece of paper with a code or QR code on them to access the assets. The user enters the key or scans the code to access their account.

 

The following wallets are compatible with Uniswap (UNI):

  1. Metamask
  2. WalletConnect
  3. Coinbase Wallet
  4. Format
  5. Portis

 

      1. Metamask

Metamask is an Ethereum-based crypto wallet that connects users to the Ethereum blockchain.  This means that users can easily manage their ERC-20 tokens, with the benefit of relating to different DEX and Decentralised Applications (DApps).

Metamask offers the following unique features:

  • An intuitive and user-friendly User-Interface
  • Multilingual support and service in over 18 languages
  • Metamask is an HD wallet which means that users need not worry about backing up every individual public or private key pair.
  • The wallet offers customizable fee structures.
  • Users can easily add new ERC-20 tokens to their Metamask wallet
  • Users can easily access several DEX from within the wallet
  • Users have a wide range of network options

 

      2. WalletConnect

WalletConnect is an open-source protocol that connects DApps to mobile wallets using QR scanning technology or deep linking. WalletConnect is a highly secure wallet option when compared to desktop and web-based platforms.

Every individual session is started using a QR code or by clicking the deep mobile link. WalletConnect is not an actual application but a protocol that can manage, send, receive, and trade UNI coins on the Uniswap exchange.

 

      3. Coinbase Wallet

Coinbase Wallet is the proprietary wallet technology of the crypto exchange trading platform Coinbase. The wallet offers users the ability to store, trade, sell, and buy different cryptocurrencies and Nonfungible tokens (NFTs) in a central place.

The Coinbase Wallet is a desktop application and a mobile wallet compatible with smartphones and tablets that run on either Android or iOS operating systems. Alternatively, Android users can also download the APK.

Coinbase Wallet is extremely secure and easily connects to the Uniswap exchange, allowing users to manage their UNI.

 

      4. Format

The format is a user-friendly alternative to web3 crypto wallets such as Metamask. The format allows users to use a mobile phone number or an email address to connect to different Ethereum-based DApps. This can occur without needing a browser extension, and users can quickly start using the wallet within 22 steps.

The Fortmatic SDK allows easy integration with existing applications, and the wallet can be connected to Uniswap.

 

      5. Portis

Portis is a non-custodial blockchain wallet, which means that private and public keys are not kept on the application server, and users have total control of their keys. Portis is a streamlined onboarding process that makes the entire process easy for novice users.

Portis is an innovative Defi application that is multi-blockchain enabled, offers a convenient fiat gateway, and is developer-friendly. 

 

Where can you buy Uniswap?

UNI, the native token for Uniswap, can be bought on the following exchange trading platforms:

  1. Kraken
  2. Coinbase
  3. Binance
  4. Gemini
  5. Gate.io

 

      1. Kraken

Established in 2011, Kraken is a popular United States-based cryptocurrency exchange trading platform that provides a wide range of tradable cryptos traded using leverage levels up to 1:5. Users also have access to a range of trading tools and educational materials.

The spreads that users can expect are variable, and the commission charged on this exchange starts from $0.

 

PROS CONS
A sophisticated proprietary mobile trading app is offered Unregulated
Offers 24/7 customer support Limited non-crypto instruments
Educational materials are provided
Users can trade a wide range of cryptocurrencies.

 

      2. Coinbase

Established in 2012, Coinbase is one of the largest and most popular United States-based cryptocurrency exchange trading platforms in the industry, which is regulated. Coinbase is regulated by FinCEN and offers comprehensive trading between different popular cryptocurrencies.

Coinbase provides traders with a good selection of educational materials, multilingual customer support, and multilingual customer support is available 24/7.

 

PROS CONS
User-friendly trading platforms offered Demo accounts are not offered
Decent range of tradable cryptos Only offers crypto trading
Offers educational material
Ultra-low minimum deposit requirements

 

      3. Binance

Binance is a Malta-based crypto exchange that has been in operation since 2017. Binance offers more than 150 cryptocurrencies that can be traded and exchanged through proprietary trading platforms, supported on mobile, desktop, and web extensions. 

 

PROS CONS
Offers more than 150 cryptocurrencies that can be traded Unregulated
24/7 multilingual customer support provided There is no telephonic customer support offered
Cryptos can be purchased using a credit card The daily market analysis not provided
Provides a comprehensive training academy Only offers crypto trading

 

      4. Gemini

Gemini is a US-based crypto exchange trading platform that has been in operation since 2014. Gemini is well-regulated by the New York State Department of Financial Services (NYDFS). Gemini offers a wide range of cryptos that can be traded in addition to its native stablecoin, the Gemini Dollar.

 

PROS CONS
Educational resources offered Limited funding options
Well-regulated
Offers a range of trading tools
Multiple trading platforms that can be used

 

      5. Gate.io

Gate.io has been in operation since 2013 and is a crypto exchange based in the Cayman Islands, offering users access to a wide range of cryptocurrencies that can be traded through advanced, powerful trading platforms available on desktop, mobile, and web browsers.

 

PROS CONS
Sophisticated trading platforms offered Limited funding options
Provides a wide range of tradable coins Unregulated
Educational resources are offered
Trading tools are provided

 

Are there criticisms against Uniswap?

Uniswap has faced some criticism during 2021 that relate to:

  • The removal of 129 tokens from the main interface of Uniswap, which are derived from other protocols such as Tether, Open, UMA, Synthetix, and several others. This move was highly criticized by cryptocurrency supporters and points towards Defi censorship.
  • Uniswap Labs faced investigations from regulators on how investors and traders use the decentralized exchange and how it is marketed.

 

What is Uniswap’s largest Competitor?

PancakeSwap is the largest competitor of Uniswap.

The difference between these two exchanges is that PancakeSwap is a Binance Smart Chain-based exchange, while Uniswap is based on the Ethereum blockchain. Binance Smart chain is known for its ultra-low transaction costs, and PancakeSwap was launched in 2020.

PancakeSwap is an Automated Market Maker (AMM) like Uniswap that provides users with the chance to trade crypto tokens and to provide liquidity. That of Uniswap inspired PancakeSwap’s development.

Other differences between these two exchanges are:

  • Market capitalization – PancakeSwap has a market cap of $3.79 billion, while Uniswap has more than $13 billion, making Uniswap the larger of the two exchanges.
  • In terms of transaction cost, PancakeSwap has lower prices while Uniswap has transaction fees that keep increasing.
  • There are 1,647 coins listed on PancakeSwap with over 9,000 different pairings. Uniswap has more than 1,852 other cryptocurrencies and 2,441 different pairings.
  • PancakeSwap runs on the Binance Smart Chain, while Uniswap runs on the Ethereum blockchain.

 

What can Example intelligent contracts do?

A smart contract can simply be defined as a program that runs on the Solana platform and ecosystem. Smart contracts consist of codes, functions, and data, which is its state, that all reside at a specific address on the Solana blockchain.

Smart contracts are not controlled by the user. They are deployed to the network and subsequently run as they were programmed.

Smart contracts can define specific rules, like any typical contract, and these rules are automatically enforced through the code. Smart contracts cannot be deleted, and the interactions with them are irreversible.

In terms of necessity, smart contracts are necessary because they help to solve the issue associated with mistrust between different parties as well as business partners.

Smart contracts have several advantages for many industries, and they can reduce unnecessary costs and time expenditure while simultaneously enhancing transparency.

Smart Contracts can be used across several industries, including:

  • Mortgage Contracts
  • Digital Identity
  • Financial Data Recording
  • Supply Chain Management
  • Protecting Copyright Content
  • Insurance, and many others.

 

The smart contracts on Uniswap are used to standardize the way that ERC-20 coins are exchanged. Anyone can build interfaces that connect to the smart contracts of Uniswap, allowing users to start trading immediately with anyone else who uses the exchange.

Uniswap uses two types of smart contracts:

  • Exchange contracts hold a particular pool of specific tokens and Ether (ETH) that users can swap against.
  • Factory contracts oversee creating new Exchange contracts. They also register the ERC-20 token addresses to the Exchange contract address.

 

No fees are charged when users add a token onto the Uniswap exchange, and anyone can call a function on the Factory contract, subsequently registering a new coin.

 

Can blockchains be hacked? Has Uniswap ever experienced any hacks?

Yes, Blockchains can be hacked.

Blockchain technology allows users to record transactions on a distributed ledger, which consists of a distributed network of computers.

The servers are secure, and the transactions carried out are permanent, making the verification thereof easier. While blockchain technology can have several uses, it is currently being used by cryptocurrencies.

Whether a blockchain can be hacked will inevitably depend on each cryptocurrency project and the security measures in place.

Blockchains can be susceptible to the following common attacks:

  • 51% Attacks – a malicious entity can gain control over more than half of the mining process. This could allow them to create a different version of the blockchain, also known as a fork, where some transactions may not reflect. This allows the attacker to designate the other blockchain as the true version, double-spending cryptocurrency.
  • Creation bugs and errors refers to security glitches, errors, and vulnerabilities when a blockchain is created. Attackers consistently try to discover and exploit vulnerabilities that exist in the blockchain. Smart contracts are often a point of attack because of possible bugs in the code.
  • Insufficient Security – There have been countless hacks on cryptocurrency exchanges, especially those who keep client funds in hot, online wallets. Blockchains and exchanges must ensure that enough measures are in place and users are urged to take control of their fund security.

 

Uniswap experienced a successful hacking event in April 2020 when $25 million worth of cryptocurrency was stolen from both the exchange and the Lnedf. Merefer lending platform. There was a vulnerability involved with the ERC777 token standard that exists on the Ethereum blockchain.

Two attacks were carried out on the exchange and the platform simultaneously, known as a “reentrancy attack.”

 

Is Uniswap a Good Investment?

Yes, Uniswap is a good investment.

Uniswap is a large, decentralized exchange that offers peer-to-peer trading to all users despite their trading and investment experience and skill.

Uniswap is a good investment for the following reasons:

  • It is a decentralized exchange that shows significant growth in the Defi space
  • Uniswap has large daily revenues, which are more significant than that of Bitcoin
  • Uniswap is one of the largest DEX in the cryptocurrency market
  • Uniswap could become more than just an exchange, potentially becoming an oracle token that can provide reliable price feeds to different intelligent contracts.
  • Uniswap has a large and active community
  • Uniswap has amazing performance

 

What is the supply and distribution of Uniswap?

Uniswap has a circulating supply of 627,823,667 UNI and a maximum supply of 1,000,000,000 UNI.

  • Fixed or maximum supply can be defined as the total number of coins that can ever be in circulation.
  • Total Supply refers to the number of coins that have been mined, including the missing coins that are no longer in circulation or that have been lost.
  • Circulating supply refers to the total number of coins that are in circulation.

 

In terms of Unlimited Supply, cryptocurrency coins are inflationary, which means that the cash will inevitably lose value as supply increases, with demand decreasing as a result.

Cryptocurrencies with a limited supply are deflationary, which means that the coins in circulation will gain value over time as demand surpasses supply.

 

Is Uniswap a viable Alternative Coin?

Yes, Uniswap is an excellent alternative coin in terms of:

  • Security – Uniswap is a secure platform with strict protocols in place to protect client funds
  • Transaction speed – Transactions on the exchange are executed fast
  • Technology – Uniswap uses intelligent contract technology instead of a conventional order book
  • Price stability – Uniswap has appreciated at a gradual pace as adoption, and use has increased
  • Potential Investment – Uniswap is a viable investment option for beginner and professional investors
  • Future use – Uniswap has a lot of potential long-term 

 

What are the differences between Uniswap And Bitcoin?

Bitcoin is considered the king of all cryptocurrencies because it was the original digital asset with the highest market capitalization. While Bitcoin is the larger between the two, Uniswap has a lot of potentials to grow significantly.

Bitcoin’s value has increased significantly over the years, and its all-time high price was well over $60,000. However, Uniswap is extremely functional and provides traders with the perfect platform to trade and exchange ERC-20 tokens.

Uniswap users can also stake their tokens on the network, which provides liquidity in return for generous rewards. Traders pay a fee when they exchange crypto, which is used to incentivize liquidity providers.

Uniswap’s prices are far less volatile than Bitcoin’s, but the demand for Bitcoin as a store of value and medium of exchange is much higher than Uniswap’s. In addition, Uniswap also has a higher maximum supply than Bitcoin.

 

  Bitcoin Uniswap
Price change 20/21 +$400% +200%
Market Cap $1.1 Trillion+ $13 billion+
Past Hacks None Yes, 2020
Popularity Very High High
Altcoin Rank #1 – Original Crypto #17

 

What are the differences between Uniswap and Ethereum?

Ethereum is the blockchain on which Uniswap was developed and launched. Ethereum is the second-largest cryptocurrency and the largest alternative coin in the crypto market. Ethereum is a programmable blockchain where DApps, smart contracts, and different Defi applications can be launched.

Uniswap is a decentralized exchange that runs on the Ethereum blockchain as an ERC-20 protocol and project, allowing users to trade and exchange a wide range of ERC-20 coins without intervention from third parties.

 

  Ethereum Uniswap
Price change 20/21 +880% +200%
Market Cap $479 Billion+ $13 billion+
Past Hacks None Yes, 2020
Popularity Very High High
Altcoin Rank #2 #17

 

What are the differences between Uniswap and Dogecoin?

Dogecoin was created as a joke following the hype that surrounded Bitcoin. Dogecoin is a Proof-of-Work blockchain where DOGE is used to tip content creators on platforms such as Reddit and Twitch. Dogecoin serves as a medium of exchange more than a store of value.

Uniswap is a cryptocurrency trading exchange where different crypto coins can be exchanged and traded, with smart contracts used to match participants and ensure that the prices remain stable.

 

  Dogecoin Uniswap
Price change 20/21 +7,300% +200%
Market Cap $29 Billion+ $13 billion+
Past Hacks None Yes, 2020
Popularity High High
Altcoin Rank #10 #17

 

What are the differences between Uniswap and Neo?

Neo is an innovative contract blockchain that aims to become a regulated platform associated with Digital Identity. At the same time, Uniswap is a decentralized cryptocurrency exchange trading platform where ERC-20 coins can be exchanged.

 

  NEO Uniswap
Price change 20/21 +160% +200%
Market Cap $2.90 Billion+ $13 billion+
Past Hacks None Yes, 2020
Popularity Medium High
Altcoin Rank #57 #17

 

What are the differences between Uniswap and NFTs?

Non Fungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. Uniswap, on the other hand, is fungible, which means that one UNI has the same value and characteristics as another UNI.

 

What are the differences between Uniswap and Solana?

Solana is the Ethereum killer because it is an extremely powerful and popular programmable blockchain and network that can process up to 50,000 transactions per second. Solana has a higher market capitalization than Uniswap, and it is more powerful and popular because of its useful application.

Solana is a platform where developers can create and launch different DApps and smart contracts.

 

  Solana Uniswap
Price change 20/21 +9,300% +200%
Market Cap $59.35 Billion+ $13 billion+
Past Hacks None Yes, 2020
Popularity Very High High
Altcoin Rank #6 #17

 

What are the differences between Uniswap and Cardano?

Cardano is another popular smart contract platform and programmable blockchain that is in direct competition with Ethereum. Cardano can be used to develop and run different smart contracts and DApps.

Uniswap is an exchange that allows traders to exchange and trade different ERC-20 coins at competitive prices.

 

  Cardano Uniswap
Price change 20/21 +2,100% +200%
Market Cap $59.54 Billion+ $13 billion+
Past Hacks None Yes, 2020
Popularity Very High High
Altcoin Rank #5 #17

 

Which decentralized exchanges operate in the same way as Uniswap

PancakeSwap is Uniswap’s closest competitor as a decentralized exchange with the following key differences between them:

  • Market capitalization – PancakeSwap has a market cap of $3.79 billion, while Uniswap has more than $13 billion, making Uniswap the larger of the two exchanges.
  • In terms of transaction cost, PancakeSwap has lower prices while Uniswap has transaction fees that keep increasing.
  • There are 1,647 coins listed on PancakeSwap with over 9,000 different pairings. Uniswap has more than 1,852 other cryptocurrencies and 2,441 different pairings.
  • PancakeSwap runs on the Binance Smart Chain, while Uniswap runs on the Ethereum blockchain.

 

What is the Omni Layer and Omni Token?

The Omni Layer is formerly known as Mastercoin. It is a digital currency and a communications protocol that was initially constructed on the Bitcoin blockchain. Omni Layer coin is the original initiative that aimed to construct an additional layer over the Bitcoin blockchain and several other systems.

The software allows users to transact with tokens that have different asset representations due to the versatility of Omni. Omi Token was the first cryptocurrency that was introduced to the network. The protocol allows users to use, send, generate, redeem, and pay dividends to and from other cryptocurrency assets and wallets.

OMNI, the native token of the Omni protocol, is the first asset that generates fees from the trustless exchange on the layer. OMNI can transform into any currency by using smart contracts that are present on the layer.

 

Is Uniswap an Omni Token?

Uniswap is not an Omni Token, but UNI can be converted to OMNI on the right exchange trading platform.

 

What is DEX?

As the name suggests, a decentralized exchange is decentralized, which means that there is no interference or control from third parties such as banks, governments, or any single entity. Decentralized exchanges are known for offering peer-to-peer (P2P) transactions between different parties by using smart contracts that are automatically executed.

Some key features of DEX include:

  • High levels of privacy because there is no KYC policies or details
  • These exchanges are much cheaper than centralized exchanges 
  • There are fewer hacking risks involved because of the decentralized nature of the exchange
  • DEX allows users to take complete control of their funds

 

In terms of their function, decentralized exchanges do not operate using an intermediary organization to clear transactions. Smart contracts are used to execute transactions between participants automatically.

In terms of the necessity for DEX, the following can be observed:

  • They can mitigate overall hacking risk because they are not centralized
  • They prevent market manipulation
  • They provide complete privacy and anonymity

 

Is Uniswap a DEX?

Yes, Uniswap is a DEX that uses smart contracts to execute trades, thereby eliminating intermediaries.