What Is Uniswap (UNI)?
Uniswap is a popular decentralized trading protocol, known for its role in facilitating automated trading of decentralized finance (DeFi) tokens.
An example of an automated market maker (AMM), Uniswap launched in November 2018, but has gained considerable popularity this year thanks to the DeFi phenomenon and associated surge in token trading.
Uniswap aims to keep token trading automated and completely open to anyone who holds tokens, while improving the efficiency of trading versus that on traditional exchanges.
Uniswap creates more efficiency by solving liquidity issues with automated solutions, avoiding the problems which plagued the first decentralized exchanges.
In September 2020, Uniswap went a step further by creating and awarding its own governance token, UNI, to past users of the protocol. This added both profitability potential and the ability for users to shape its future — an attractive aspect of decentralized entities.
Who Are the Founders of Uniswap?
Uniswap came about as a plan to introduce AMMs on Ethereum to a wider audience. The platform’s creator is Ethereum developer Hayden Adams.
Adams worked in various projects while finalizing Uniswap, and his work was informed directly by Ethereum creator Vitalik Buterin. Buterin even ended up giving the protocol its name — it was originally known as Unipeg.
Adams has also said that the original inspiration for the Uniswap platform came from one of Buterin’s own blog posts. His original idea to focus on Ethereum came after a friend convinced him to begin researching and understanding the protocol in 2017.
Primary features of Uniswap.
- Uniswap (Uni) is an ERC-20 token compatible with the Ethereum blockchain.
- It works on the ‘Proof-of-Concept’ consensus algorithm.
- It has a market capitalization of over $11 Billion that makes it one of the Top 15 cryptocurrencies in the world.
- People holding Uniswap (Uni) can vote in the governance protocol.
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Staking Tokens: Locking some of your Uniswap tokens in the liquidity pools will help you in earning extra tokens.
Online Payments: Uniswap coins can be used to make payments at international stores.
Investment: The returns on the Uniswap (Uni) have shown a positive growth that makes it a perfect investment for good returns.
International Transfers: Transfer funds internationally using Uniswap interface.
How Is the Uniswap Network Secured?
Uniswap is a decentralized protocol for trading, and UNI is its in-house governance token. UNI is an ERC-20 token, meaning it requires Ethereum to function.
ERC-20 merely defines a set of rules for tokens, as well as security considerations mainly related to the strength of the Ethereum network. For example, congestion can hike the price of gas needed to perform transactions, leading to delays and abnormally high transaction fees, which impact all participants.
Separately, smart contracts can cause security issues that could lead to DeFi traders losing funds; in fact, hackers have already succeeded in stealing millions of dollars in DeFi’s short lifetime as of September 2021.
Pros & Cons of Uniswap coin.
PROS
- Governance Rights: The Uniswap (Uni) token holders can vote on internal development decisions.
- Yield farming: People can earn Uniswap (Uni) tokens by stacking them in liquidity pools.
- No-Liquidity problems: The native ecosystem, Uniswap, is not just a DEX but also solves liquidity problems.
- Airdrops: People are eligible for airdrops (Uni tokens) as they use the services of Uniswap.
CONS
- Decision Powers: The people in power can modify or change the decisions in the governance protocol as only 60% of tokens are left for the community.
- Early Implementation: The Uniswap (Uni) has not even been completed a year to date and it would be a little early to comment on the future upgrades planned by the company.
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Cryptocurrency