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Uniswap platform and UNI cryptocurrency: history of creation and principle of operation
What is Uniswap?
Uniswap is a decentralized exchange based on a distributed ledger that performs transactions with cryptocurrencies without intermediaries. Uniswap has a simple concept that aims to be automatic in providing liquidity for crypto traders.
Uniswap allows you to quickly and securely exchange Ethereum ETH, as well as other ERC-20 tokens. Cryptocurrency exchange follows a strategy, the essence of which is to combine tokens into specialized smart contacts and create certain pools of liquidity, while providing participants with the opportunity to trade.
The history of the creation of the Uniswap platform
Hayden Adams is considered the creator of the Uniswap exchange. Initially, the developer was a mechanical engineer at Siemens. Adams' dismissal from the company occurred in 2017, which led to the offer of his friend, Carl Flersh from the Ethereum Foundation, to become the creator of a smart contract platform for Adams.
The next couple of years, the future Uniswap developer devoted to a detailed study of the basics of Ethereum, JavaScript and Solidaty and, as a result, implemented AMM (automated market maker mechanism). Already in 2018, Hayden Adams received a grant of one hundred thousand dollars from the Ethereum Foundation to implement his own concept.
The first demo version of the Uniswap protocol was presented in March 2018, and the full version of the platform was released by November of the same year. The project was created with the support of Microsoft and Google programmer K. Capuozzo, as well as F. Diane, E. Milenius and others.
The name of the Uniswap platform was originally planned as "Unipeg" – derived from "Unicorn" and "Pegasus". However, Vitalik Buterin (founder of Ethereum) assured: “Uniswap sounds better.”
How Uniswap works
Uniswap has a decentralized platform for automatic liquidity provision that uses smart contracts.
The bottom line is that smart contracts function as automatic market makers, while balancing liquidity requests for exchange services.
An important factor is that the Uniswap platform does not have an order book or a specific centralized intermediary. Every network user can become a supplier on Uniswap by creating their own liquidity pool, all because the platform is open source. It is important to note that any ERC-20 token, having its own pool, can be implemented on the platform without specialized permission as a protocol.
Purpose of UNI tokens
In 2020, the platform released its first "UNI" token. The main purpose of the tokens is to increase the involvement and decentralization of the Uniswap protocol, which gives users even more control rights. Also, UNI allows crypto enthusiasts to vote for suggestions and improvements for further activities and development of the platform.
Key Features of the Uniswap Platform
Benefits of Uniswap:
- Transactions without verification. The main advantage of Uniswap is that traders are given the opportunity to execute transactions directly from their own wallets, while avoiding any verification.
- Platform security. The Uniswap protocol does not store any funds at all and is not related to storage at all, the platform is secure.
- Quick access to new tokens. The exchange allows you to quickly and easily get regular access to new tokens. And Uniswap's smart contracts have been audited more than once, which is confirmed by audit reports.
- Low commissions. Regular exchanges offer 0.5%, unlike Uniswap which offers only 0.3%.
Disadvantages of Uniswap:
- Risks of overload. Occasionally, the Ethereum network is heavily overloaded, which happens due to the large number of active users involved.
- Creation of fake tokens by scammers. The lack of user verification, as well as easy access to creating liquidity and placing tokens, provides fraudsters with the opportunity to create fakes.
Uniswap prospects and UNI capitalization
At the time when UNI was first introduced as a platform, it had a capitalization of $5.8 billion, making it one of the thirteen largest assets in the cryptocurrency market. At the moment, UNI is one of the potential DeFi projects that can enter the TOP-10 of the crypto industry market.
The UNI airdrop is so successful that it is encouraging many other DEXs to use a similar model. People engagement, trading volumes and asset values clearly show high prospects.
The Uniswap platform is currently in the development phase of version 3.0, which is being funded in the amount of about $11 million.
The capitalization of UNI in 2021 is about $9,863,376,054.
The UNI course fluctuates around $17.23.
Conclusion
Uniswap allows anyone who owns an Ethereum wallet to quickly and easily exchange tokens without the involvement of third parties. The uniqueness in the liquidity protocol and management system through UNI tokens provides users with confidence in using the platform, which further increases the number of interested individuals. And the main advantage is that the swap of Ethereum tokens thanks to Uniswap has become incredibly simple.
