Uniswap is the most popular and largest decentralized crypto trading platform in the world, offering its users a way to swap tokens, earn passive income and do more. UNI is the native token of the Uniswap platform and serves as its governance token, empowering UNI holders with voting rights on proposals to update it.
The Uniswap ecosystem supports more than 300 integrations, bringing together DeFi apps, developers, traders and liquidity providers into a decentralized marketplace, powered by blockchain technology. The original Uniswap DEX was designed on the Ethereum blockchain, it has since expanded to operate on other ecosystems as well, such as Polygon, Optimism and Arbitrum.
The largest DEX running on Ethereum, Uniswap is the most widely used decentralized exchange in the world, enjoying a TVL of over $5 billion as of May 2022. It supports the trading of ERC-20 tokens on Ethereum and is one of the largest liquidity providers for some of the leading digital assets.
Its operational model removes the centralized intermediary to perform token swaps and trade, relying on automated smart contracts to enforce trust in the Uniswap ecosystem. The Uniswap exchange also functions as an automated market maker (AMM), creating liquidity pools, providing liquidity in the market and letting users swap one ERC-20 asset for another on its platform.
You can learn more about Uniswap(UNI) at our KuCoin Blog.
The Uniswap protocol's automated market maker depends on smart contracts for swapping, liquidity providing, and other services. The decentralized model ensures that users no longer need to place their crypto assets or trust an intermediary to perform transactions within Uniswap.
Users can head to the Uniswap platform to trade Ethereum’-based ERC-20 tokens in a peer-to-peer interface with no intermediaries. The DEX also offers additional features, including self-custody of assets, censorship resistance, and complete security in operations.
Uniswap Labs, the company behind the development of the DEX, oversees its technical maintenance and updating. The decentralized protocol itself was originally conceived as a way for users to swap ERC-20 tokens within the Ethereum blockchain. It then evolved into an AMM and enabled peer-to-peer transactions and trades as well. The Uniswap protocol also includes a web-based interface, allowing users to engage with the platform directly without downloading any app on their devices.
The UNI token powers the governance system of the Uniswap automated liquidity protocol, giving token holders the power to participate in votes and decide on the future evolution of the platform itself.
One of the most significant recent developments voted on by the community holding this governance token involves the launch of Uniswap on Polygon, which helped trigger bullish moves in the Uniswap price at the time. The move was much cheered as it not only expanded the DEX’s reach but helped reduce transaction fees by taking advantage of the popular Layer-2 Ethereum scaling solution’s infrastructure.
As of May 2022, there exist three versions of the Uniswap Protocol - V1, V2 and V3. V3, the latest version, is open source, while all versions enjoy 100% uptime after being deployed.
The idea for Uniswap's liquidity pools was originally proposed by Ethereum’s co-founder Vitalik Buterin in 2016. Hayden Adams, its creator, started the development of the platform in 2017 with the help of numerous grants, including $100,000 from the Ethereum Foundation.
The Uniswap DEX was launched on 2 November 2018 and quickly went on to handle high trading volume and enjoy strong liquidity in new tokens. It gradually grew into the largest DEX in terms of trading volume, spearheading the DeFi revolution which began and went mainstream in 2020.
The Uniswap protocol held a seed funding round in April 2019 led by Paradigm, a leading venture capital firm. Its Series A funding round took place in August 2020, inviting participation from renowned investors, including a16z and Union Square Ventures.
Uniswap V3 launch took place in May 2021, bringing with it higher capital efficiency - a measure of daily volume vs. liquidity. Uniswap V3 exchange could also be deployed on Layer. 2 networks, improving the scalability of the platform, and allowing more users and liquidity to be added.
Uniswap is one of the biggest names in the DeFi market and could continue to grow as this sector gains traction among investors. The entry of institutional investors into the world of DeFi can further increase the value of the Uniswap platform and keep the UNI price supported, making it a worthwhile cryptocurrency to invest in.
Positive sentiment among investors across the world towards the crypto market in general in addition to decentralized finance can continue to keep Uniswap among the top crypto assets by market cap. Whenever the larger cryptocurrencies like Bitcoin and Ethereum trade bullish, the sentiment overflows into the altcoin segment as well, benefiting other cryptos such as UNI token.
Uniswap could also turn into an attractive digital asset to invest in as it announces operations on more blockchain ecosystems in the future. As we discussed previously, investors cheered Uniswap’s addition to the Polygon ecosystem in early 2022. A similar move for further multi-blockchain capabilities can make Uniswap an even bigger project and send the UNI price higher in the future.
There are several ways to earn UNI tokens, including:
You can lend liquidity to any liquidity pool in the Uniswap DEX to earn returns in UNI crypto. The amount of rewards you receive will depend on the trading volume, your share of liquidity to the pool, and the amount of time you lock up your ERC-20 tokens on the platform.
KuCoin offers an extremely convenient way to earn UNI tokens and grow your holdings in Uniswap crypto. Simply head to the Crypto Lending page and look for the UNI crypto from the list of offerings we have.
Enter the number of UNI tokens you wish to lend and choose the duration - from 7 days, 14 days to 28 days. You can then view the daily interest rate and get an estimate on the profit you could earn by lending liquidity in UNI. Confirm the order after verifying all the details to start earning UNI on KuCoin.
As one of the most popular DeFi tokens, several DEXs offer the option to lend liquidity and earn rewards for the Uniswap token. However, we recommend you perform your research before selecting the right DeFi protocol and liquidity pool for this option.
Here’s how you can buy tokens on the Uniswap DEX:
1. Create an account on Uniswap if you are new to the platform. Connect an Ethereum wallet to your account to add funds for trading.
2. Ensure that you have funds in ETH, USDT or any other ERC-20 tokens to get started with.
3. Select the token you have in your wallet and wish to exchange or swap for another token on the platform.
4. Select the cryptocurrency you wish to swap your original crypto for from the dropdown list.
5. Click on Swap and wait for a few minutes to confirm the transaction based on the network activity levels on the Ethereum blockchain. Do note that you will be charged transaction fees for every order on Uniswap, which will be determined based on the gas fees of the Ethereum blockchain at the given time.
MetaMask is one of the most popular crypto wallets for Ethereum and ERC-20 tokens. You can swap from MetaMask on Uniswap protocol by following the steps listed below:
1. Create an account on MetaMask if you don’t already have one. Add funds to your wallet by buying crypto on exchanges like KuCoin and transfer your funds into the MetaMask account.
2. Open an account on Uniswap if you are new to the platform. Ensure that you connect your MetaMask wallet to your Uniswap account after successful registration. 3. You can then follow the steps listed in the section above to swap one ERC-20 token for another and store them in your MetaMask wallet.