Uniswap is an automated liquidity protocol on the Ethereum blockchain. The platform allows anyone to trade ERC-20 tokens without the use of a middleman. Uniswap uses an automated market maker system (AMM) to determine prices, smart contracts executed by independent computers are deployed on the Ethereum blockchain to do so.

The project was launched to the Ethereum mainnet in 2018 by Hayden Adams. Since then, several versions have been released, with the most recent V3 version offering slight modifications and better capital efficiency from previous editions.

The goal of Uniswap is to facilitate trustless easy and efficient automated token swaps, and also improve performance and user experience when compared with traditional exchanges.

What are UNI’s key features and how does it work?

Where a traditional exchange is centralized, regulated, and users are required to deposit funds, Uniswap, on the other hand, has no order book and uses a permissionless system. This means it does not require a price match between buyer and seller.

Instead, the protocol deploys smart contracts which hold liquidity pools. Users trade against reserves of tokens in these liquidity pools. The smart contracts allow traders to exchange tokens, or add liquidity to the pool in exchange for earning a fee (these are called liquidity providers).

To determine the price of the coin, Uniswap uses a unique AMM (Constant Product Market Maker Model), x*y=k, where k is a constant:

a smart contract holds x amount of Token A, and y amount of Token B;
anyone can buy or sell either token;
the amount that is bought or sold is exchanged with an equivalent amount of the other token in the pool to maintain the constant k;
this means that the reserves are automatically rebalanced, and tokens can be bought or sold without needing a counterparty.

What makes Uniswap noteworthy?

Uniswap is an AMM-based decentralized exchange. It uses pre-funded liquidity pools that replace traditional order book systems. Liquidity providers earn passive income on their deposits through trading fees based on the percentage of liquidity they provide.

The algorithms in smart contracts set market prices for the trades, instead of order books. This means that the system is completely decentralized and traders have complete control over their funds.

Another noteworthy characteristic is that users can lend their crypto to the platform. Users supply Ethereum tokens to Uniswap “liquidity pools”, earning a fee in return. This means that any trade can be executed immediately, provided there is enough liquidity in the pool.

The exchange also allows tokens to be listed for free, a notable difference from traditional exchanges which normally charge a listing fee.

Where can you buy UNI?

UNI, the Uniswap protocol token, is used as part of the project’s governance system. Owners of the token can vote on protocol updates and changes.

Uniswap (UNI) Coins are available to buy on most trading platforms listed on the market tab. They can be traded against FIAT, stablecoins, and other cryptocurrencies. Uniswap price will be determined by the order book’s buy and sell orders.

Alternatively, you can trade for the coin directly on the Uniswap exchange. You can do this by connecting your crypto wallet to the Uniswap app and then making your trade, to do this you must first buy another cryptocurrency. On the Uniswap exchange, the price of UNI is determined by its AMM.

Uniswap UNI

Historical Data for Uniswap