$7.25

Uniswap is a widely used decentralized trading platform that enables automated trading of DeFi tokens. It operates as an automated market maker (AMM), having launched in November 2018, and gained significant attention in 2020 due to the DeFi boom. The protocol aims to keep token trading automated and open to all token holders, while enhancing trading efficiency compared to traditional exchanges. It addresses liquidity issues through automated solutions, avoiding problems faced by earlier decentralized exchanges. In September 2020, Uniswap introduced its governance token, UNI, distributing it to past users, which added profit potential and allowed users to influence the platform's future, a key feature of decentralized systems.

Uniswap was created by Ethereum developer Hayden Adams, who sought to bring AMMs to a wider audience on Ethereum. His work was influenced by Ethereum's creator, Vitalik Buterin, who even named the protocol, originally called Unipeg. Adams has mentioned that the initial inspiration came from one of Buterin's blog posts, and he was encouraged to focus on Ethereum after a friend suggested he explore the protocol in 2017.

Uniswap is designed to provide liquidity for the DeFi space, enabling trading and its associated value. It is a major AMM that uses a formula for automated exchange, specifically X x Y = K, with founder Hayden Adams claiming to have invented this particular implementation. Unlike some decentralized exchanges, Uniswap solves liquidity issues by automating market making, reducing risk and costs for users, and removing identity requirements. Anyone can create a liquidity pool for any token pair. The UNI token was introduced to establish Uniswap as publicly owned and self-sustainable infrastructure. Uniswap V2 launched on Nov. 2, 2018, adding features like ERC-20 pairs and price oracles, and V3 followed on May 5, 2021.

The total supply of UNI is 1 billion tokens, which will be released over four years, followed by a perpetual inflation rate of 2% to sustain network participation. The distribution is as follows: 60% to the community, 21.51% to team members, 17.8% to investors, and 0.69% to advisors, with the latter three subject to a four-year vesting schedule. Of the community share, 15% is claimable by users who interacted with Uniswap before Sep. 1, 2020, even including those with unsuccessful transactions, who can claim 400 UNI. UNI enables shared community ownership and governance of the protocol, allowing holders to participate in its development in a neutral and trustless manner, with the protocol's success potentially influencing the token's price.

Uniswap is a decentralized trading protocol, and UNI is its governance token, which is an ERC-20 token, meaning it relies on Ethereum for its operation. ERC-20 sets rules for tokens and security considerations tied to Ethereum's network strength. For instance, network congestion can increase gas prices, causing delays and high transaction fees. Additionally, smart contract vulnerabilities can lead to loss of funds, as seen in DeFi hacks that have resulted in millions of dollars stolen as of September 2021.

UNI is available for trading on major exchanges, including Binance, Huobi, and Coinbase Pro, as well as on Uniswap's own protocol, both V2 and V3. It can be traded against various cryptocurrencies, stablecoins, and fiat currencies. For more information on entering the cryptocurrency market, regardless of the token, further resources are available.