Learn about Uniswap
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Uniswap: what is it, how does it work and what is the price of UNI
Learn all about Uniswap (UNI), a very particular cryptocurrency that gives a lot to talk about. What is Uniswap Coin, the importance of its protocol and the role of decentralized exchanges.
As is often the case with cryptocurrencies, its historical price presents high volatility and the UNI cryptocurrency is not the exclusion to the rule. If you are interested in knowing the variations of Uniswap and its main characteristics, continue reading this article.
What is Uniswap (UNI)?
Uniswap is a decentralized exchange protocol (DEX) to exchange ERC20 Tokens that has taken a huge role in the crypto world due to its particular operating system.
Uniswap is a DEX (Decentralized Exchange or Decentralized Exchange), which allows you to exchange some cryptocurrencies for others, using smart contracts on the Ethereum network.
An exchange like Satoshi Tango allows users to entrust their digital assets to a trusted third party, so that exchanges are carried out without setbacks. In this case, the exchanges are centralized and are called CEX, that is, they are exchanges managed through a company.
Non-centralized exchanges are known as DEXs. The exchange runs on top of blockchain technology and is generally controlled in a democratic manner whereby users participate in the decision-making processes of the exchange.
Origin of Uniswap
The beginnings of the project are quite unique because it all started with a series of posts created by Vitalik Buterin in 2017. The first one was on Reddit, where Buterin envisioned the ability to create DEX on Ethereum and another in 2018 aimed at decentralized market makers.
Hayden Adams, devised and introduced Uniswap, the protocol for trustless and permissionless connection to Liquidity Providers (LPs), i.e. those who hold ERC-20 tokens and introduce them for use in the Uniswap Protocol; with those who want to trade several different ERC-20 tokens using smart contracts from the Ethereum blockchain, where transactions and exchanges are processed or executed by the decentralized nodes of the network (which anyone has the opportunity to manage) , and where the proof of the transaction is conveniently registered and available.
On September 16, 2020, Uniswap announced the launch of UNI, a new token designed around three fundamental points: offering a new reward mechanism for participating in Uniswap pools and services, rewarding those who believed in the project from the beginning and enable a more decentralized on-chain governance system.
Since then, Uniswap has been in constant evolution and has come to position itself as one of the largest DEFI projects on Ethereum.
UNI Crypto Features
- Uniswap works like exchanges. That is, it changes from one currency to another, and this change is made in a completely decentralized way.
- The purpose of the DeFi token is to recreate the most common financial services, but in a decentralized way; that is, without intermediaries.
- It allows its users to create markets from which third parties can benefit.
- The creation of these markets is self-sustaining, allowing the protocol to generate income that serves to encourage the injection of liquidity in exchange for a small interest to its investors.
How does Uniswap work?
Uniswaphas two functions, firstly to provide a decentralized means of exchange (DEX) to its users, and secondly, to provide a means to create an automated liquidity protocol (AMM).
In the first case, Uniswap works as an exchange. That is, it lends change from one currency to another, and this change is made by the platform, in this case in a completely decentralized way.
Uniswap works under a design called Constant Product Market Maker (CPMM). What this operating model does is create liquidity pools (or liquidity pools) that traders can trade quickly.
Yes, we are talking about the liquidity pools that are maintained by users who want to take this role, who are encouraged to invest in these pools in order to obtain commissions for their participation in them.
Advantages and disadvantages of UniswapUniswap
As we have already explained, Uniswap is a very particular cryptocurrency. Therefore, it is essential to explain its advantages and disadvantages before embarking on an investment in this digital asset.
Advantages of UNI
One of the main advantages of Uniswap (UNI) is its completely decentralized system. Furthermore, access to the protocol can be done using any web3 wallet (MetaMask) and create custom applications on top of them.
It also offers the possibility to create an exchange for any ERC-20 token. It should even be noted that it is a non-profit and completely open-source project.
Finally, it is important to clarify that the operation within the platform is cheap and the liquidity groups offer good levels of profit for their providers.
Disadvantages of UNI
One of the main disadvantages of Uniswap is that the use of gas by the platform is high. In addition, given the current scalability problems of Ethereum, the system fees and its operations on the blockchain turn out to be quite expensive.
Uniswap is highly experimental like almost all DeFi technology. This is why you have to be aware and knowledgeable, since there is a high risk for those who are not well informed.
Future of the Uniswap cryptocurrency
The future of the Uniswap cryptocurrency seems to be very clear. Because in a few months Uniswap V3 will be released. What is it about? It is simply a platform update.
UNI V3 will spawn new automated non-custodial markets. It will even be applied in the Ethereum Virtual Machine, for which greater capital productivity is estimated with strict liquidity control.
Uniswap - Frequently Asked Questions
What is Uniswap's currency?
Uniswap (UNI) is an Ethereum token provided by Uniswap, an automated liquidity provider designed to facilitate the trading of Ethereum tokens.
When was Uniswap launched?
On September 16, 2020, Uniswap announced the launch of UNI, a new token designed to offer a new reward mechanism for participating in Uniswap pools and services.
What can be done with Uniswap?
Uniswap offers a reward mechanism for participating in Uniswap pools and services, you can reward those who believed in the project from the beginning and enable a more decentralized on-chain governance system.
Who is the creator of Uniswap?
Hayden Adams, devised and introduced Uniswap, the protocol for trustless and permissionless connection to Liquidity Providers (LPs).
What is Uniswap v2?
The Uniswap decentralized exchange was launched in November 2018, but the biggest update did not come until May 2020 with Uniswap V2.
How many Uniswaps are there?
There are a total of 1 billion Uniswap Units (UNI). In turn, there are two versions of the platform and they plan to launch the third.
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